Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Tuesday 19 March at Seven o'clock.

Mr. Speaker: As Bills Nos. 2 to 12 have blocking motions, I shall, with the leave of the House, deal with them in a single group.

BIRMINGHAM CITY COUNCIL BILL (By Order)

CAMBRIDGE CITY COUNCIL BILL (By Order)

C-POULTRY COMPANY LIMITED BILL (By Order)

FELIXSTOWE DOCK AND RAILWAY BILL (By Order)

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)

HARROGATE STRAY BILL (By Order)

LINCOLN CITY COUNCIL BILL (By Order)

PLYMOUTH MARINE EVENTS BASE BILL (By Order)

SCARBOROUGH BOROUGH COUNCIL BILL (By Order)

STREATHAM PARK CEMETERY BILL (By Order)

YORKSHIRE WATER AUTHORITY BILL (By Order)

Orders for Second Reading read.

To be read a Second time upon Monday 18 March.

LERWICK HARBOUR ORDER CONFIRMATION BILL

Read the Third time, and passed.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Agriultural Development and Advisory Service

Mr. Kirkwood: asked the Minister of Agriculture Fisheries and Food what representations he has received about the proposed cuts in the Agricultural Development and Advisory Service funding outlined in the White Paper on public expenditure.

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): A small number of representations have been received expressing concern about the proposed cuts.

Mr. Kirkwood: Does the Minister acknowledge that one of the reasons why the agriculture industry has had such success in increasing productivity is to the research and development work and advisory service of ADAS? Does he further acknowledge that the industry is under a great deal of pressure at the moment to try to conform to more environmental regimes of farming, to increase animal welfare and to deal with the whole question of high input, high output, farming? If the right hon. Gentleman acknowledges those things, does he agree that it is inapposite and inappropriate at this time to cut the ADAS budget in the way that he is proposing?

Mr. Jopling: I gladly acknowledge the esteem in which ADAS is held and the quality of service for which ADAS is well known. I believe that it was right to ask Professor Bell to report. He recommended that the beneficiaries of services provided by ADAS should contribute to the cost of those services. I consider it only right that the industry should be given the opportunity to help to maintain the service that it requires.

Sir John Farr: Does my right hon. Friend recognise that the quality of the advice of ADAS is excellent and that, as a result, it has won the confidence of agriculture? Will my right hon. Friend also bear in mind that the similar advice that one can get on a commercial basis from companies with a financial interest is not of the same quality or value to the average farmer?

Mr. Jopling: Many farmers prefer to get advice from ADAS, which they believe to be more likely to be independent than the advice that they can get from commercial sources.

Mr. John: Does the Minister agree that the chief advantage of ADAS is to the smaller farmer? Will not the scheme of charges that is now proposed inhibit the very people who benefit most from claiming such advice?

Mr. Jopling: That is not necessarily so. I ask the hon. Gentleman to look again at Professor Bell's report, in which he suggested that the information technology of the latter part of this century should be brought into the service. We shall be investing a good deal of effort in finding modern ways of bringing advice to farmers, particularly small farmers.

Mr. Kennedy: Will the Minister explain why the proposed cut in Scotland, which, as he knows, operates under a tripartite arrangement with the Department of Agriculture and Fisheries for Scotland and the agricultural colleges, is almost twice that proposed for England and Wales? It is a cut of 41 per cent., at £3·5 million.

Mr. Jopling: The hon. Gentleman ought to do his homework. The planned expenditure of £40 million by my Department on advisory services in 1987–88 will be reduced by £16·6 million, and the expenditure of £8·2 million by the Scottish Department will be cut by £3·4 million, which is the same percentage in each case.

European Community (Agricultural Prices)

Mr. Strang: asked the Minister of Agriculture, Fisheries and Food what is Her Majesty's Goverrment's


policy towards the European Commission's latest agricultural price proposals and package; and if he will make a statement on the progress made to date by the Council of Agriculture Ministers in considering those proposals.

Mr. Latham: asked the Minister of Agriculture, Fisheries and Food what is the latest position regarding the progress of the Common Market price negotiations.

Mr. Jopling: With your permission, Mr. Speaker, I shall answer this question and question No. 5 together at the end of Question Time.

Milk Quotas

Mr. Hunter: asked the Minister of Agriculture, Fisheries and Food if he has any plans to amend the guidelines governing the allocation of secondary milk quotas; and if he will make a statement.

Mr. Jopling: I do not think it would be appropriate to change the guidelines now that the tribunal has virtually completed its work.

Mr. Hunter: With a constituency case in mind, may I ask my right hon. Friend seriously and urgently to consider the familiar argument that dairy farmers who cannot economically diversify into other areas of production should receive more beneficial treatment than farmers who can diversify? Will he explain why, despite its compelling logic and natural justice, this principle has not been taken on board?

Mr. Jopling: I am at a disadvantage in that I do not know the exact case to which my hon. Friend refers. However, I have been able to use the outgoers scheme. I hope that before long those small producers who experience the kind of difficulties to which my hon. Friend has referred will have milk quotas returned to the level of production that applied in 1983 before milk quotas started.

Mr. Ashdown: Is the Minister able to tell the House why he has decided to remove himself from the capacity of providing a final review of appeals and tribunals which hand out secondary milk quotas? Is this not the Minister's own decision? Is it not a requirement which has been laid upon him by European legislation? Because of the number of anomalies now coming to light, which I grant are not many, would it not be better for the Minister to have the capacity to review those decisions?

Mr. Jopling: I recognise that there may be certain categories of producers who do not fall within the provisions laid down by the regulations but who nevertheless are in need of an additional quota. With the help of the tribunal, I am attempting to identify those categories. However, as the hon. Gentleman knows, the problem is to find additional quota to give to them. There is only one place from which that could come — from other farmers who have a quota.

Mr. Hicks: Where is the consistency for the smaller, exclusive dairy producer? On the one hand, he has been led to believe by my right hon. Friend that he will achieve a milk quota equivalent of at least a 40-cow herd; on the other hand, as a result of his appearance before the tribunal, he is being cut to less than that equivalent output.

Mr. Jopling: Again, I do not know the case that my hon. Friend has in mind. If he is referring to those cases

where the tribunal has cut the amount of secondary quota that was awarded by the panels, I should point out that the tribunal is a judicial body over which I have no control. Farmers were warned early on during the tribunal hearings that some secondary quotas were being cut. Therefore, they went to the tribunal with that risk in mind.

Mr. Strang: Will the right hon. Gentleman acknowledge that the areas where livelihoods and jobs are being hit hardest by the quota policy do not have much of an alternative but to grow grass? As the farms are relatively small, they cannot therefore earn a decent income from beef or sheepmeat. Will the right hon. Gentleman do his best to protect those areas and bear that observation in mind, especially when considering the suggested free market in quotas?

Mr. Jopling: Bearing in mind the answer that I gave a few moments ago, I hope that the hon. Gentleman will acknowledge that I have tried to help the smaller farmer because of the difficulties created by milk quotas. I have always made it clear, both in the House and outside, that I am sympathetic towards the possibility of getting more flexibility into the transfer of milk quotas. I have always been attracted by the possibility of leasing quotas. I intend at a very early date to push that possibility with the Council of Ministers and with the Commission in Brussels.

Mr. Cockeram: Does my right hon. Friend accept that the doubts and lack of decision in the milk industry have gone on for too long and that it is time the tribunal and the quotas were finally clarified? Farmers cannot be expected to go on any longer not knowing their ultimate quota.

Mr. Jopling: Yes, I agree. The tribunal has virtually finished its work. We have almost reached the end of telling farmers what their secondary quotas are. As the House knows, there will be a cutback on wholesale awards in England and Wales, which we believe will be at least 35 per cent. I hope that we can get the matter tidied up shortly.

Mr. Nicholson: The right hon. Gentleman spoke earlier about helping small farmers. I remind him again that in Northern Ireland he has only 1 per cent. of what he required in the milk buy-out scheme, even after a second bite at the cherry to buy out further quota. How far along the road has he proceeded, and has he any solution to the problem?

Mr. Jopling: It is true that the take-up of the outgoers scheme has been a good deal less in Northern Ireland, and that has made it more difficult to meet the problems of the small farms there. We are giving urgent attention to that matter.

Mr. Ralph Howell: Can my right hon. Friend confirm that there is now a milk register in all the countries of the EC?

Mr. Jopling: I should not like to answer for some countries in the Community. I sometimes think that the responsibility for dealing with these matters in one country is enough for any man.

Mr. Home Robertson: What has been the good of running an elaborate scheme of appeal tribunals to assess the need for secondary quota if their recommendations have to be scaled down by 42·5 per cent. in Scotland and at least 35 per cent. in England and Wales? Will the


Minister now accept the need for an expanded and more flexible outgoers scheme to provide a quota to satisfy the clearly proven need?

Mr. Jopling: We would not have needed a cutback on wholesale awards if I had originally made a larger cut than 9 per cent. on milk production at 1983 levels. I had to make a judgment at that time as to how much it was fair to add to the 6·15 per cent. cutback. I took the view that 2·5 per cent. was right. When I asked the National Farmers Union if it had a better figure in mind, it was unable to give me a more suitable figure, so I acted on my judgment.

Mr. Watson: Does my right hon. Friend accept, at least in principle, the need for greater transferability of quota between one farm and another, including, if necessary, a more reasonable system for the allocation of ownership of quota between tenants and landowners?

Mr. Jopling: I understand the problem to which my hon. Friend refers, and so did the NFU in its response to the consultation paper that we recently put out. But, in terms of what can be negotiated in Brussels, we are more likely to obtain progress on greater flexibility by moving towards leasing than by moving towards sale and purchase.

Norwegian Pout Fishery

Mr. Wallace: asked the Minister of Agriculture, Fisheries and Food what steps his Department is taking to monitor the Norwegian pout fishery in the North sea for the purpose of checking the percentage by-catch.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): The fisheries protection service, under the direction of my right hon. Friend the Secretary of State for Scotland, has conducted extensive sampling of catches in the Norway pout fishery since October. Up to the end of February, 64 vessels had been boarded at sea, and the catches from a further 15 vessels had been checked on landing. Of the 79 vessels checked, 80 per cent. had less than a 10 per cent. by-catch of the species concerned, mainly haddock and whiting. Only one was over the 18 per cent. limit, and a successful prosecution resulted.

Mr. Wallace: The amount of monitoring that is going on will be recognised, but I am sure that the Minister will equally acknowledge that there is still a great sense of grievance in the fishing industry at the increased by-catch. I am sure he is aware that a boat, under the auspices of the Scottish Fishing Federation, is conducting its own monitoring exercise. If the result of that shows that damage is being done to white fish stocks by the current pout fishery, will he give due weight to that experiment and ensure that it increases his resolve to resist any extension of the present 18 per cent. by-catch rule beyond 31 May?

Mr. MacGregor: As the hon. Gentleman knows, we secured substantial changes in the proposal last year without any support whatever. If the proposal for an extension is put forward—and that is not known at this stage—it will have to be considered in the light of the monitoring of fisheries under the present rules and in the light of the latest scientific advice. Obviously, we shall look at all the evidence. Our paramount consideration

which is also the paramount interest of our fishermen, is to ensure that there is adequate protection of the juvenile component of the North sea white fish stocks.

Mr. Donald Stewart: I welcome the Minister's figures for current monitoring, but will he bear in mind that a 10 per cent. by-catch was presented to fishermen as the final settled common fisheries policy? The increase to 18 per cent. was regarded as a sell-out. It is therefore essential that no extension of that is permitted. If, as the hon. Member for Orkney and Shetland (Mr. Wallace) suggests, there is any attempt to raise it, Scottish fishermen will make an unholy effort to obstruct that.

Mr. MacGregor: With regard to the common fisheries policy, I think that it has always been understood that changes can be made on conservation aspects. Last year I made it clear to the hon. Member for Orkney and Shetland (Mr. Wallace) that I thought that United Kingdom fishermen were unlikely to suffer any reduction in their effective fishing opportunities, particularly in the fishing of whiting — which is what people were concerned about—as a result of the change. I think that that has proved to be so, because we did not reach our full whiting quota last year. We have managed to obtain a substantially increased whiting quota this year, which suggests that the conservation effects are not as people originally suggested. However, I shall certainly monitor the position very carefully.

Mr. Home Robertson: Does the Minister accept that it is vital that the edible fish stocks that have been reestablished, largely as a result of sacrifices made by British fishermen, should be protected? In the light of the evidence which the Ministry of Agriculture, Fisheries and Food and the Department of Agriculture and Fisheries in Scotland obtain, and in the light of that secured following the exercise carried out by the Scottish Fishing Federation, will the hon. Gentleman undertake to do everything possible to protect those fish stocks from over-fishing?

Mr. MacGregor: Yes, and I agree that the adequate protection of our stocks is a key consideration. That is one of the points that we shall have most in mind in approaching any changes within the common fisheries policy.

English Vineyards Association

Mr. Steen: asked the Minister of Agriculture, Fisheries and Food when he last met the chairman of the English Vineyards Association; and what subjects were discussed.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): Ministers from this Department have not met the chairman of the English Vineyards Association, but this Department is in regular touch with the association.

Mr. Steen: I hope that my hon. Friend will arrange to meet the chairman of the English Vineyards Association. Is she aware that English wine comes from English grapes grown in the 200 or so commercial vineyards in this country, whereas the only thing British about British wine is the water added to imported syrup or grape must? When she meets the chairman, will she tell him what she intends to do to ensure that the British public are not continually


deceived into thinking that they are being patriotic by buying British wine, just because of misleading wine labelling?

Mrs. Fenner: I must disagree with my hon. Friend in that respect. It is for local authorities and the courts to decide whether the public are being misled and whether labels comply with food labelling regulations and the Trade Descriptions Act. My hon. Friend will know that the labelling of British wine is covered by a voluntary code of practice to prevent confusion with English wine from English vineyards. The labels on British wine are marked, "Made from imported grape juice."

Sir Peter Mills: Does my hon. Friend realise that there is no wine lake in Devon, and that the growing of grapes might prove to be a good alternative crop while we have surpluses in other things? Just as we in Devon produce the finest cider, we might also produce some Chateau Devon.

Mrs. Fenner: In 1984, English wine production was about 1,350,000 litres from 325 hectares. Another 106 hectares have been planted out but are not yet producing. Perhaps my hon. Friend should be sorry that there are not any in Devon.

Surplus Food Stocks

Mr. Canavan: asked the Minister of Agriculture, Fisheries and Food what is the total volume and value of surplus food stocks currently held (a) in the United Kingdom and (b) in the European Economic Community as a result of the common agricultural policy.

Mr. MacGregor: On 28 February intervention stocks of beef, breadwheat, butter and skimmed milk powder in the United Kingdom were 321,820 tonnes, valued at their purchase price at some £450 million. On 30 November 1984 intervention stocks of these products and sugar held in the Community as a whole were 7,847,000 tonnes, valued on the same basis at £4·2 billion.

Mr. Canavan: Is it not an unforgivable crime against humanity for the British Government to support the policy of hoarding millions of tonnes of surplus food stocks while at the same time over 30 million people in more than 20 African countries are facing the threat of starvation? If the Government are too narrow-minded to give up membership of the Common Market rich man's club, will they at least consider taking emergency unilateral action to release more food stocks to help starving people in the Third world?

Mr. MacGregor: I hope the hon. Gentleman will agree that it is as a result of the very successful and effective efforts of British farmers that we have moved in 10 years from being a major net grain importer to being a major grain exporter. It is only that that has enabled us to contribute substantially to the food aid programme. The hon. Gentleman will know that substantial quantities of grain are supplied both by the Community and by the United Kingdom and that the European Council agreed in Dublin to provide 1·2 million tonnes of grain to the drought-stricken African countries before the next harvest. We have also done a good deal this year. The United Kingdom is playing a big part in both respects.

Mr. Body: Much as we may blame the common agricultural policy, does my hon. Friend agree that in this country we now have a whole range of national aids in the

form of grants, subsidies and tax allowances, nearly all goading farmers into increasing output, whereas in the rest of the Common Market the national aids are directed in the main to other objectives, including helping smaller farmers and new entrants into farming?

Mr. MacGregor: My hon. Friend should consider the changes that have been made in the capital grants scheme in the United Kingdom in the last two or three years, where considerable reductions have been made in the areas where there has been a surplus. He will also note that we have geared those changes so that we are helping and protecting the smaller farmer as against the larger farmer.

Mr. Andy Stewart: Can my hon. Friend assure us that if all the Members of Parliament who received cotton seeds this morning were to plant them, we would not have over-production of cotton?

Mr. MacGregor: I suspect that not many Members of Parliament have yet got as far as realising that they were in their postbags this morning, so I think I can give that assurance.

Mr. Geraint Howells: Has the Minister had any consultation with his counterparts in Europe about abolishing the intervention scheme for beef? Is he in favour of introducing a deficiency payment scheme similar to the one operating within the sheep industry to help beef producers and housewives?

Mr. MacGregor: Of course, the variable premium scheme achieves precisely that. I think the hon. Gentleman will know that we have made it clear that we shall put up just as stern a fight as we did last year to ensure the continuance of that scheme if we can possibly achieve it.

Mr. Phillip Oppenheim: Does my hon. Friend agree that it is preferable in some respcts to have surpluses of food, as we have in Europe, as opposed to deficits, as there are in some of the countries which the hon. Member for Falkirk, West (Mr. Canavan) associates with and supports?

Mr. MacGregor: It is a sensible safeguard to have some surpluses and to have a system which ensures supplies to the consumer of commodities where production can vary from year to year. As I am sure my hon. Friend recognises, the problem is that our farming industry has been so successful in some commodities that we are in danger of having regular surpluses well beyond our requirements. It is to deal with that problem that we have to try to achieve reforms within the Community.

Mr. Deakins: Is the Minister aiming to increase or decrease cereal production in the Community in the coming year?

Mr. MacGregor: We are endeavouring to get a long-term realistic price policy so that producers can respond to market signals. That is why we have been arguing that we should go somewhat beyond what the Commission has been proposing this year and try to get a policy for a longer period than one year.

Sir Paul Hawkins: I appreciate my hon. Friend's tendency to try to help small farmers, but they do not receive the aids that small business men receive. Will my hon. Friend make more positive gestures to help small farmers whose difficulties in managing the grants—

Mr. Speaker: Order. The question is about the EC.

Sir Paul Hawkins: Perhaps my hon. Friend will answer on that basis.

Mr. MacGregor: I have had some experience of both aspects of the question. Within the European Comunity system specific aids go to small farmers, and here at home there is considerable concentration on the small farmer which is as extensive as that on small businesses in general.

Mr. John: Has the Department made an estimate of the stocks of cereal and livestock which will be surplus at the end of the decade, since 50 per cent. more beef and between 60 and 200 per cent. more cereal is now in storage?

Mr. MacGregor: That is difficult to estimate, because we do not know what changes will take place in the price review An extensive review of policy generally is now taking place in the Commission. We shall have to await the outcome of that. It is clear that if we continue with the same policies that we have operated over recent years the stocks of both commodities will be too high.

Danish Fishing Allowance

Mr. Austin Mitchell: asked the Minister of Agriculture, Fisheries and Food what steps he is taking to reduce the 18 per cent. by-catch allowance to Danish industrial fishing boats to 10 per cent. and then to 5 per cent.

Mr. MacGregor: The Council regulation which provides a derogation allowing a white fish by-catch of 18 per cent. subject to a limit of 8 per cent. on species other than whiting, when fishing for Norway pout in the northern and central divisions of the North sea will expire on 31 May 1985. The permitted white fish by-catch will then revert to 10 per cent. for all species unless a decision is taken to the contrary.

Mr. Mitchell: Does the Minister concede that the pout box is there to protect the breeding grounds and the young, immature white fish which could be caught up in industrial fishing? Does he agree that a by-catch of 18 per cent. is a threat to the stocks and to our fishing industry? Does he further accept that the increase in the quota from 10 per cent. — which was assumed by our industry to be an integral part of the common fisheries policy settlement — was rushed through by the Commission in a way in which we never rush through conservation provisions? Does the Minister therefore accept that not only must the by-catch limit be cut and properly policed, but that there is a case for ending industrial fishing altogether?

Mr. MacGregor: I do not think that the increase in quota was rushed through, because we argued about it for five months. As a result of those arguments we managed to agree on substantial changes, including better sampling techniques, to enable us to ensure more rigorous enforcement, as has happened this year. The key consideration is the conservation of the stocks. That is what we have most in mind, and that is what we shall be examining if another proposal is made.
One of the reasons why we did not receive as much support as we might have expected last year is that the evidence shows that the quantities of haddock and whiting discarded in human consumption fisheries in recent years equate to, and in some years exceed, the quantity taken as a by-catch in industrial fisheries.

United Kingdom Fishing Industry

Mr. Torney: asked the Minister of Agriculture, Fisheries and Food what action he proposes to protect the United Kingdom fishing industry from the dangers to the industry resulting from the entry of Spain into the European Economic Community; and if he will make a statement.

Mr. Jopling: The terms of Spanish entry into the Community are still under negotiation. We have so far been successful in maintaining a Community negotiating position on fisheries which safeguards the present balance of the common fisheries policy and the interests of the United Kingdom industry.

Mr. Torney: Is the Minister aware that the Spanish fishing fleet is larger than the whole of the Common Market fishing fleet put together? Is he further aware of the deep fear among British fishermen about what will happen to their catches and their livelihoods when Spain enters the Common Market? What action is the Minister taking to defend the British fishermen in the negotiations? Is his Department represented in the negotiations? What action will he take to reassure British fishermen?

Mr. Jopling: I agree that the problem is the size of the Spanish fishing fleet and the failure of the Spaniards so far to bring it into line with fishing opportunities. The hon. Gentleman should bear in mind that the bigger part of the Spanish fishing fleet operates, and will continue to operate, in third country waters away from the Community. It is in our interests to ensure that every encouragement is given to Spain to restructure its fleet. At the same time, we must consider the cost to the Community of achieving that.

Mr. Hicks: Is my right hon. Friend aware that the fishing industry in the south-west in particular feels very vulnerable, especially as in the past agreements on paper have not always existed in reality?

Mr. Jopling: If Spain and Portugal are to enter the Community, it is essential that we strengthen the existing policing and the inspectorate. The current exclusion of Spanish vessels from the Irish and Celtic seas — the so-called Irish box — in our view should continue for a long transitional period.

Dr. Godman: When the Secretary of State talks about the restructuring of the Spanish fleet, he is presumably talking about the reduction of the fleet. What is the likely reduction of that fleet; that is, the part of the fleet that can fish in European waters? Is the EC to give compensataon to Spanish fishing interests, and will part of that compensation be given to Spanish fishermen whose employment disappears when their vessels tie up at the quay?

Mr. Jopling: I referred a few moments ago to the fact that in restructuring the Spanish fleet we shall have to consider what the cost will be to the Community. We are insisting that the numbers of Spanish vessels operating in waters of existing member states should remain subject to clear and enforceable limits for a very long period, if not for the full duration of the current common fisheries policy.

Mr. Kirkwood: Will the Minister give us an idea of the timetable for the negotiations which he is working on


at the moment? Will he give us an assurance that if he cannot get a deal that is acceptable to the British industry he is prepared to block the accession deal?

Mr. Jopling: The Community's current position is that the basic transitional period should be 10 years, with a review in 1993. Transition could be ended before 10 years if the Council so agreed, but in the absence of specific decisions control arrangements would go forward for a further period, possibly up to another five years.

Mr. Forth: Will my right hon. Friend confirm that if satisfactory arrangements cannot be arrived at in this matter we will not accept the accession of Spain to the Community on unsatisfactory terms?

Mr. Jopling: As my hon. Friend will know, these are all matters that are currently within the negotiations. Following on the previous question, if it proved possible to agree satisfactory arrangements applying right up to the end of the present common fisheries policy in the year 2002, it would clearly be worth going for that if we cannot get a shorter agreement.

Mr. Mark Hughes: Will the Minister comment upon the decision by the European Assembly this morning that the Falklands and perhaps, consequentially, Ascension, Saint Helena, Martinique, Guadaloupe and every other part of the Community should have a 200-mile zone to buy off Spanish fishing resources in the eastern Atlantic?

Mr. Jopling: The hon. Gentleman will know that these matters do not come within my own departmental responsibility, but I will draw his comments to the attention of my right hon. Friend.

Meat Marketing Scheme

Mr. Maclean: asked the Minister of Agriculture, Fisheries and Food when he expects to be in a position to comment on the proposed changes to the meat marketing scheme.

Mr. MacGregor: Many of the recommendations in the recent review of meat promotion — I think that this is what my hon. Friend was referring to — which was carried out for the Meat and Livestock Commission by an independent review team concern the MLC's work and organisation. These are matters for the MLC to decide. A few involve the Government's responsibilities. On these we await an approach from the MLC in the light of its consultations with the industry interests concerned.

Mr. Maclean: I thank my hon. Friend for that reply. Given the controversy that the Webb report has already generated, does my hon. Friend think that agreement can be reached among the meat producers and others involved in the meat industry on the next steps to be taken? If so, when?

Mr. MacGregor: I know that the commission is seized of the need to make decisions as quickly as possible. The commission is anxious and keen to carry out the consultation procedure properly, and this takes time. I hope that the various interests can reach a broad measure of agreement — I am sure that my hon. Friend is with me on that point — with the MLC on any new arrangements that would require parliamentary approval. We would need to have detailed discussion with the commission when the commission makes up its mind. I cannot, at this stage, say when that will be.

Sir Hector Monro: Does my hon. Friend agree that, in terms of meat production and consumption, it is essential that we continue with the beef premium, the suckler cow subsidy and the hill and livestock compensatory allowance, all of which are crucial to providing beef for the housewife in the short and long term?

Mr. MacGregor: As I have said to the House before, we entirely agree with my hon. Friend's point about the beef variable premium scheme. That is what we shall endeavour to achieve in the price review negotiations on which we have embarked. On the hill and livestock compensatory allowance my hon. Friend will know that we have recently completed agreement on the new structures programmes, and I see no reason why they should not continue.

Lamb and Beef Prices

Mrs. Kellett-Bowman: asked the Minister of Agriculture, Fisheries and Food what is the average consumer price of lamb and beef in the United Kingdom.

Mrs. Fenner: The prices of different cuts of meat vary widely. Information collected by the Department of Employment in the course of constructing the retail price index indicates that the price of a leg of home-killed lamb in January 1985 was 169·1p per lb, compared with 159·1 per lb a year ago. The price of chuck braising steak, for example, was 170p per lb in January 1985, compared with 168.5p per lb in January 1984.

Mrs. Kellett-Bowman: I thank my hon. Friend for that answer. Ignoring the different cuts, and taking the average price per pound of a carcase of lamb, is it not true that the price of a pound of lamb is cheaper in this country than in any other country in Europe and that, similiarly, the price of a pound of beef is cheaper in Britain than in any other European country, except Holland? Is that not a tribute to the sheepmeat regime and the beef variable premium, which we must retain?

Mrs. Fenner: I agree with my hon. Friend that the beef and the sheepmeat variable premium schemes have helped to keep down the price of meat to the consumer. The schemes have benefited producers while reducing the need for costly intervention.

Mr. Maclennan: I recognise that the sheepmeat regime has given the consumer a good deal. Will the Government press strongly during the negotiations in Brussels to ensure that the seasonal scale of the sheepmeat regime is altered to the advantage of our farmers?

Mrs. Fenner: We are trying to do exactly that.

Mr. Home Robertson: Is the hon. Lady aware that the Minister's reply yesterday was less than totally reassuring about the Government's commitment to defend the beef variable premium and the sheepmeat regime? Since these measures are almost unique in the common agricultural policy, in that they are to the benefit of not only the producer but the consumer, may we have a cast-iron guarantee that they will be retained?

Mrs. Fenner: The hon. Gentleman could not have been listening. My hon. Friend the Minister of State has already said today that we shall be pressing strongly for the retention of the beef variable premium scheme.

British Food Quality Mark

Mr. Gale: asked the Minister of Agriculture, Fisheries and Food what is his policy on the new British food quality mark scheme recently launched by the Food from Britain organisation.

Mrs. Fenner: The Government welcome this important marketing initiative on the part of British food producers. It shows that they understand the importance of achieving high standards of quality.

Mr. Gale: Will my hon. Friend give every encouragement to an increase in the portfolio of goods carrying the mark? Will she pay particular attention to the excellent quality of fruit and vegetables available from the county of Kent?

Mrs. Fenner: My hon. Friend will know that I have a slight bias towards the county of Kent. The Government have a commitment of £14 million during the first five years. The long-term success of Food from Britain will depend also on the support that it receives from industry.

Mr. John: Does the Minister recognise that the other St. Michael has already given the scheme the thumbs down by saying that it is not good enough for Marks and Spencer? Will she have urgent consultations to see that the scheme truly raises standards in this country?

Mrs. Fenner: I believe that it truly raises standards. The other St. Michael has exceptionally high standards.

Mr. Meadowcroft: Does the Minister accept that many countries to which we export food rightly insist upon more information about the content of the food being provided, and that she should now insist on it in view of the announcement that she made at a press conference a few days ago? Will she again consider nutritional food labelling to improve the information given to British people as well as those abroad?

Mrs. Fenner: We are discussing nutritional food labelling with the food industry. We do not intend to make it mandatory, as with fat labelling, but we should like to see a format specified by regulation so that it can be recognised by the consumer.

Oral Answers to Questions — PRIME MINISTER

Public Service Broadcasting

Mr. Key: asked the Prime Minister if she is satisfied with the arrangements for financing of public service broadcasting; and if she will make a statement.

The Prime Minister (Mrs. Margaret Thatcher): The current BBC licence fee application will be settled on the basis of the present arrangements. As far as the longer term is concerned, I have made it absolutely clear that we do not rule out the possibility of changes.

Mr. Key: While thanking my right hon. Friend for her answer, may I ask whether she agrees that it is important to bear in mind that there are already a large number of pensioners and low income households which find it hard to pay the existing fee? Will she also resist calls to fund the BBC out of general taxation, which would remove its independence and tend to put it in the hands of the Government of the day?

The Prime Minister: I understand my hon. Friend's anxiety about increases in the licence fee. He will be aware

of the recent Peat Marwick Mitchell report, which suggested a number of improvements in efficiency, which my right hon. and learned Friend will be taking into account before he makes his decision. I have no intention of putting the BBC's licence fee, or any part of it, on to the general body of taxpayers.

Mr. Fauld: Is not the flaw in the right hon. Lady's policies that she knows the price of everything but is unaware of the value of anything?

The Prime Minister: The hon. Gentleman should address his remarks to the BBC.

Mr. Brinton: Does my right hon. Friend agree that the main problem which the BBC and the Government face with the BBC's request for an increase, which many of us regard as excessive, is that the BBC has failed tc address itself to the question—let alone attempted the answer—as to what the licence payer should be expected to pay for in 1985 in these days of multi-choice broadcasting? Will she consider a wide-ranging inquiry into the whole future of public service broadcasting?

The Prime Minister: I understand my hon. Friend's anxiety. The BBC's licence fee is in the nature of a compulsory levy on people who have television sets. I have taken note of his other suggestions.

Engagements

Mr. Martin: asked the Prime Minister if she will list her official engagements for Thursday 14 March.

The Prime Minister: This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, including one with President Mubarak of Egypt.

Mr. Martin: During the course of the Prime Minister's busy day, will she consider the problems at the Springburn British Rail engineering workshop, where the work force is to be reduced from 1,500 to 500? Since the turn of the year about three major redundancies have been announced in my constituency and some young people are even getting married without ever having had a decent job. Will she come to Springburn and tell us that her policies are working?

The Prime Minister: The hon. Gentleman will be aware that the amount of work for British Rail workshops has diminished as changes in the business on the railways and in the type of equipment which they use occur. With regard to his wider question, we are doing everything that we can to increase the youth training scheme and to give more young people technical training so that they may be better able to find jobs.

Mrs. Peacock: asked the Prime Minister if she will list her official engagements for Thursday 14 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mrs. Peacock: Does my right hon. Friend agree that the Kirklees metropolitan district council appears to be misguided when, having given away £35,000 to support striking miners, it now finds it necessary to increase the rates by 35 per cent. to save local authority jobs, given that that will put in jeopardy many jobs in my local industries?

The Prime Minister: Such a rate increase puts an enormous burden on small businesses especially, because it has to go on to their costs and therefore on to their prices. That makes them less competitive and can deprive the area of jobs. It is also an enormous increase for domestic ratepayers.

Mr. Kinnock: I know that the Prime Minister will share my concern and that of millions of other people about the increase in crimes such as mugging and robbery, the increase in drug-taking and the acts of hooliganism such as those last night, which horrified the people of Luton and the whole country. Since concern clearly is not enough, what is the right hon. Lady's personal view of the main causes of these afflictions of society?

The Prime Minister: It is not for me to give a personal view on that. The crime figures for 1984 show that there has been a large overall increase in the number of notifiable offences recorded. This is in spite of the increased police manpower and better training and equipment.
The right hon. Gentleman referred to what happened last night on the football field. There is a question on the Order Paper which my hon. Friend the Minister responsible for sport will answer at the end of Question Time. However, I will comment on sentences. There was extremely important guidance from the Court of Appeal. My right hon. and learned Friend the Home Secretary has made it clear—and he has been supported by the Court of Appeal—that sentences that fail to reflect society's abhorrence of serious crime can undermine public confidence in our criminal justice system.

Mr. Kinnock: I am sure that the Prime Minister was not trying intentionally to evade my question. The problems of breakdown in behaviour are so great that none of us can simply watch them increase. Everyone, most of all the House of Commons and everyone in it, must have a direct opinion on what are the main causes. Does the right hon. Lady agree that we need action to identify and deal with the causes of these afflictions and the breakdown in behaviour in society? Does she agree, further, that asking the police and the courts to bear even greater burdens is no answer and that issuing yet another White Paper undertaking yet another inquiry is no answer for the old who are frightened, for parents who are anxious and for young people who have to grow up in this society?
With those considerations in mind, will the Prime Minister engage in activities to get at the root causes of these problems so that we can arrive at the right cures to them? I assure her that if she undertakes — [HON. MEMBERS: "Too long."] This is a basic matter of national concern. It deserves a real response. If the right hon. Lady is prepared to take action to get at the causes, I assure her that she will have the full co-operation of the Opposition in taking steps to provide the cures.

The Prime Minister: As the right hon. Gentleman will be aware, there have been many theses and inquiries into the causes of crime. Despite all of them, crime has increased under all Governments and in all countries. The causes vary from lack of parental discipline and lack of teacher discipline to background—in fact, to everything. Having said that, it is not exactly easy to cure it. We have to tackle it by way of increased numbers of police and

increased equipment. I believe that what the Court of Appeal said in the case of R. v. Wood in January 1984 is very true:
It seems to us, that the time has come for the courts to impose sentences which may deter those who are minded to use violence at or near football grounds.

Mr. Kinnock: rose—

Hon. Members: No.

Mr. Kinnock: This is a national problem, which faces us all. It requires national answers that involve us all. The right hon. Lady is still talking about symptoms. What will she do about the causes? Why will she not accept offers of help in identifying those causes and in curing the problem?

The Prime Minister: When one has said that contributory causes are family background, parental discipline and teachers' discipline, it does not help to solve the problem. It may help the right hon. Gentleman to get through Question Time, but it does not help in solving the problem.

Sir Edward Gardner: Does my right hon. Friend agree that, when dealing with punishment for serious crime, there must be a distinction between offences which do not involve violence and offences which do involve violence? Does she agree that for offences involving violence, only in rare cases should the offender escape imprisonment?

The Prime Minister: I agree with my hon. and learned Friend, and I believe that that is what the Court of Appeal was saying in the case that I cited.

Mr. Donald Stewart: Will the right hon. Lady take time to consider the fact that a rating revaluation is taking place in Scotland for the second time and that there has been no similar revaluation in England? As this means a 17 per cent. increase in rates — almost four times the rate of inflation—and is defended by the Secretary of State for Scotland on the ground that it will protect Scottish ratepayers, to avoid an unfair advantage being given to one part of the United Kingdom will she order its postponement until similar protection is offered to English ratepayers?

The Prime Minister: As the right hon. Gentleman is aware, the system for revaluation is different in Scotland from that in England. Had I interfered, he would have been the first to complain.

Mr. Heathcoat-Amory: asked the Prime Minister if she will list her official engagements for 14 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Heathcoat-Amory: Has my right hon. Friend seen the alternative Budget proposals put forward by the deputy leader of the Labour party, in which he calls for a 98 per cent. maximum rate of taxation and describes his proposals as penal? Does she agree that the Labour party has learnt nothing and forgotten nothing during its six years in opposition?

The Prime Minister: Yes, Sir. Now we have it directly from the Labour party that it wishes to reimpose penal taxation rates up to 98 per cent. That is confiscation. It is a tax on enterprise and initiative and it will not help the country, jobs or industry to recover.

Mr. Marshall: asked the Prime Minister if she will list her official engagements for Thursday 14 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Marshall: Further to the question of the right hon. Member for Western Isles (Mr. Stewart), is the Prime Minister completely unaware of the outrage felt in Scotland about revaluation? Will she now instruct the Secretary of State for Scotland to postpone the revaluation either until he carries out his promise to reform the rating system or until revaluation takes place in the rest of Britain?

The Prime Minister: The difficulty that arises from revaluation is the variation between the amounts raised from industrial and commercial ratepayers and those raised from domestic ratepayers. That is only a small part of the problem. The real problem is the high rate of expenditure and the comparatively few domestic ratepayers. That means that rates are not a proper tax on the accountability of the local authority.

Mr. Colvin: asked the Prime Minister if she will list her official engagements for Thursday 14 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Colvin: Will my right hon. Friend find time today to confirm that teachers' pay has increased by 9 per cent. ahead of prices since 1979, and that if we wish to improve what is currently on offer to individual teachers the way to do so is to reward merit, which would involve not paying any more to those teachers who deny children examination opportunities and who also threaten schools for the handicapped, 10 of which are under serious threat?

The Prime Minister: I agree with my hon. Friend that teachers' pay should be restructured to take into account performance and success in teaching children, which, after all, is the fundamental job. I agree also in condemning some of the strikes that there will be this week and next week that affect special schools. That is one of the most despicable and disgraceful things that a teacher can do. For example, this week teachers are on strike at a boarding school for 300 partially sighted children, among others. That is disgraceful.

European Community (Agricultural Prices)

The following questions stood upon the Order Paper:

Mr. Gavin Strang: To ask the Minister of Agriculture, Fisheries and Food what is Her Majesty's Government's policy towards the European Commission's latest agricultural price proposals and package; and if he will make a statement on the progress made to date by the Council of Agriculture Ministers in considering those proposals.

Mr. Michael Latham: To ask the Minister of Agriculture, Fisheries and Food what is the latest position regarding the progress of the Common Market price negotiations.

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): I refer the hon. Members to the reply I gave yesterday to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) on the outcome of the meeting of the Council of Agriculture Ministers earlier this week.

Mr. Strang: Is the right hon. Gentleman aware that the announcement that the Council is prepared to fund the conservation of wildlife in our rural areas is welcome in principle? Can we have an assurance that we shall have an end to the payments under management agreement that involve paying out large sums of money to landowners, on some occasions indefinitely, not to plough up land or do something else to it that they have no intention of doing anyway? Will he give us an assurance that money is not being used for that purpose?

Mr. Jopling: The intention of this power, which we have been given with the blessing of the Council of Ministers and the Commission, is to ensure that where traditional forms of agriculture are endangered they can be preserved. I do not know what the hon. Gentleman is going on about. I remember that, at the end of the time when the Labour Government were in power, they attempted to take legislative steps to do the same thing on Exmoor.

Mr. Latham: Why did yesterday's long answer contain no suggestion that Ministers intend to press for the total abolition of the milk co-responsibility levy? Has not this impost long since lost all meaning with the new quota regime?

Mr. Jopling: I have always made it very clear to the Council of Ministers and the House that I believe that if it is the intention to help dairy farmers a much better way to do so is by reducing the co-responsibility levy —which is ineffective — rather with giving them price increases.

Dr. David Clark: With regard to the environmental aspect of the Minister's statement, as we shall have to enact legislation to obtain EC money, and as the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food and her colleagues defeated clause 4 of my Private Member's Bill, which would have permitted that, will the Minister accept my invitation to reinstate clause 4 on Report?

Mr. Jopling: I understand that the Committee, for what I believe are extremely good reasons, decided to

delete a clause from the hon. Gentleman's Private Member's Bill and it is not intended to reinstate it. He is mistaken, because the provision that was agreed on Tuesday in Brussels does not envisage, at this stage, Community money being available for these projects, although the Commission has agreed to examine within the coming months the ways in which this scheme can be brought more broadly within the Community system.

Mr. Douglas Hogg: Does my right hon. Friend agree that we are clearly moving away from the policy objectives of the past 20 years, aimed at maximising production? Would it not be helpful to the farming community if my right hon. Friend could state, within the context of the CAP negotiations, what exactly are his policy objectives and those of his Department and farming generally in this country?

Mr. Jopling: I have made the Government's policy objectives on the current price-fixing clear. I hope that I shall have another opportunity to explain them soon. We shall hear what my right hon. Friend the Leader of the House says shortly. My hon. Friend is right; we are no longer looking for maximum production. We have major, damaging and expensive surpluses. The Government want a new sense of realism in the CAP so that the growth of those surpluses can be controlled properly.

Mr. Nigel Spearing: In respect of that realism, does the Minister agree that the first possible date for evaluating the effect of the disciplinary system on agricultural prices cannot be before March 1987, because the first crop year to which it will apply is 1986–87?

Mr. Jopling: The hon. Gentleman is right to mention the new feature of our negotiation, which is covered by the budgetary discipline and financial guidelines agreed at Fontainebleau. Those powers and constraints became effective for the first time on Tuesday in Brussels with regard to the new structures directive. We were given guidance by the ECOFIN Council to keep within 5·25 billion ecu. We succeeded.

Mr. Tony Marlow: Would my right hon. Friend like to take this opportunity to tell his partners in the Community that he will not accept the package of measures, which alter significantly the nature or the level of the beef variable premium scheme? If he is not prepared to do that, does he realise that many farmers will be deeply worried?

Mr. Jopling: My hon. Friend has heard me say outside the Chamber in the past 24 hours that we shall do everything possible to attain the continuance of the beef variable premium scheme.

Mr. Robert Maclennan: What additional resources will be put into the British hills and upland sector as a result of the structures package?

Mr. Jopling: The new structures package gives a scheme which runs another five years after the previous five-year scheme. It is business as usual for assistance that can be drawn on for hills and uplands.

Mr. Kenneth Carlisle: Is my right hon. Friend aware that his efforts to win CAP money for the conservation of the countryside and its protection merit praise? Will he persevere in those efforts and carry them through to success?

Mr. Jopling: I am grateful for my hon. Friend's kind words. It is our continuing objective to get Community money as part of these schemes. At the moment, the arrangement is that they can be funded only nationally. I assure my hon. Friend that we shall continue in our endeavours.

Mr. D. N. Campbell-Savours: Does the right hon. Gentleman agree that clause 4 of the Wildlife and Countryside (Amendment) Bill introduced by my hon. Friend the Member for South Shields (Dr. Clark) is indistinguishable from the stance that the right hon. Gentleman has negotiated in the Community? If he agrees, why does he not accpet clause 4? By rejecting it, he is merely undermining the agreement that he has negotiated and which the public relations people in his Department have spent the past 24 hours advocating as a great win for the British Government.

Mr. Jopling: The hon. Gentleman might not think that this is a successful move, but many conservation bodies throughout the country have applauded it warmly and welcomed what we have achieved. As for the clause that the hon. Gentleman mentioned, I invite him to go away and read what my hon. Friend the Minister said on Second Reading, and the rest of the debate. He will see that there are two quite separate issues here and that the reasons for voting out the clause were extremely good.

Mr. Robert Adley: Following the supplementary question of my hon. Friend the Member for Grantham (Mr. Hogg), may I ask whether my right hon. Friend is aware that there is considerable anxiety about people in Israeli-occupied territories, such as the citrus growers of Gaza, being denied access to the EEC for their produce while Israel, which goes rampaging around the middle east, appears to enjoy favourable terms? Will my right hon. Friend examine that matter personally?

Mr. Jopling: As my hon. Friend will know, the conduct of the negotiations for the enlargement of the Community is not my direct ministerial responsibility, but I shall draw his remarks to the attention of my right hon. and learned Friend the Foreign Secretary.

Mr. Eric Deakins: Is the Minister prepared to use his veto in the Council of Agriculture Ministers, if, as seems highly likely, that Council, by a

majority, decides to increase agriculture prices in the coming year far in excess of those recommended by the European Commission, and in defiance of the financial guidelines that have been recommended in the House?

Mr. Jopling: I have made my position clear, which is that I believe that there should be price restraint at this time. I have given general support to the Commission's proposals and, indeed, I have said that in some cases price reductions should be even more stringent. With regard to talking about vetoes, I am not prepared to conduct negotiations with the hon. Gentleman in the Chamber.

Mr. Brynmor John: Reverting to the structures agreement, the principles of which we agree, does the right hon. Gentleman accept that only when we see how much money is spent can we judge whether the welcome that was given overnight is justified? Is it true that we shall need primary legislation even for the national power that we now have to deal with the environment and farming? If that is true, what legislative vehicle will the right hon. Gentleman use? He has told my hon. Friend the Member for South Shields (Dr. Clark) that he will not use my hon. Friend's Bill. What legislation will he bring forward, and when will it be brought forward, so that we may have some actual results? How much money will the right hon. Gentleman spend on that national initiative? May I finally ask him about the Community examination? Has the Community now agreed in principle— and, in particular, has the Commission agreed — that Community money should be expended on the environment, or is it merely a cursory examination, to be rejected at the end of the year?

Mr. Jopling: With regard to the money available for the structures directive, the hon. Gentleman might like to know that the Commission's original proposals were that it would cost over 8 billion ecu and we have now fitted those provisions within a budget of 5·25 billion ecu. Therefore, that is a move towards realism. We believe that it is likely that we shall need primary legislation to bring about the environmental provisions. We are not yet able to do so, and, of course, it will ultimately depend on the views of the House, in dealing with legislation, as to how much money will need to be available. With regard to the environmental schemes, the hon. Gentleman will realise that we are already using part of the funds from my Department in an experimental scheme in the Broads.

Luton Football Match (Crowd Violence)

Mr. Graham Bright: (by private notice) asked the Secretary of State for the Environment if he will make a statement on the crowd violence and rioting in Luton yesterday which coincided with the football match between Luton and Millwall.

The Parliamentary-Under Secretary of State for the Environment (Mr. Neil Macfarlane): I have already discussed last night's violence with the chief executives of the two clubs concerned. We need to establish all the facts. There is to be an inquiry by the Football Association, and my right hon. and learned Friend the Home Secretary has asked the chief constable of Bedfordshire for a report. It would be wrong for me to prejudge those reports. As a separate matter, at the request of my right hon. Friend the Prime Minister, I am calling for a report from the Football Association within a week on what action it intends to take to deal with those clubs some of whose followers have a history of violence. When that report is available, my right hon. Friend the Prime Minister intends to meet the officers of the Football Association.

Mr. Bright: Does my hon. Friend agree that when clubs have a track record of violence, which is the case with Millwall, adequate provision should be made to forestall trouble, preferably by means of ticket only matches, which unfortunately was not the case yesterday? Does my hon. Friend further agree that there should be much more co-operation, in that clubs should give information of the number of supporters who are likely to go to away matches? I understand that in this case there was some under-estimation. Will my hon. Friend do whatever he can to urge magistrates to dish out some jolly good punishments to those who were arrested yesterday, and will he join me in offering condolences to all those policemen who were severely injured?

Mr. Macfarlane: I certainly wish to associate myself and my hon. Friends with the sentiments expressed in the latter part of my hon. Friend's question. Sentencing procedures are a matter for individual courts, and my hon. Friend will not expect me to be drawn on that point.
My hon. Friend's point about the importance of appraisal before each match was graphically illustrated in my letter of 3 February 1983 to all 92 professional league football club chairmen. I said that this would require
careful and detailed preparation and planning, especially with the police. This will involve a rigorous on-site assessment by both clubs well in advance of all matches involving sides with a history of violence by a minority of their supporters.
I must now establish the facts, together with my right hon. and learned Friend, to find out exactly what went wrong with that pre-match planning because it seems to me to be the most important element in all these types of activities.

Mr. John Carlisle: Is my hon. Friend aware that last night I attended the Luton-Millwall match and that consequently I was prevented from returning to the House to vote on a three-line Whip? I witnessed scenes which can only be described as terrifying. Is my hon. Friend aware that my constituents are very angry about the

destruction of their homes, their shops, their town and their football club? They demand nothing less than revenge on those who inflicted that damage.
Is my hon. Friend aware that urgent consultations must take place between him and the Home Secretary—I am sorry that the Home Secretary is not in his place this afternoon — on the question of harsher and stiffer penalties? Is he also aware that the only way to deal with these hooligans is to inflict upon them the physical pain which they last night so readily inflicted upon others? Does my hon. Friend appreciate that the time for talking, commissions and inquiries is over and that we must take action?

Mr. Macfarlane: I must point out that my hon. Friend the Minister of State, Home Office, who is responsible for the police force, is sitting with me on the Front Bench. I am grateful for that. I believe that my hon. Friend the Member for Luton, North (Mr. Carlisle) has underlined the anxieties which many people in many cities now feel as a result of the activities of a minority of so-called football followers.
As for individual assessment by the courts, my hon. Friend must not expect me, from my Department, to be responsible for the conduct of those sentencing policies. They are very much a matter for the magistrates. But his comments will no doubt be noted outside the House. I well understand my hon. Friend's anxieties. That is why I am not conducting another inquiry. During the past few years there have been many inquiries and conferences. I am conducting an urgent appraisal of what went wrong yesterday evening and am endeavouring to find out what took place.

Mr. Joseph Ashton: Why was it that the National Coal Board did not have to pay for the police on the picket lines, while football clubs have to pay for policing inside football grounds? Is the Minister aware that this problem will not be overcome until there is proper crowd control and proper segregation, for which most clubs cannot afford to pay? The Chancellor of the Exchequer takes 42p in every pound by means of the football pools betting duty, which brings £200 million a year into the Exchequer. When will the Government use some of that money to enforce law and order inside football grounds and protect the spectators?

Mr. Macfarlane: Money from that source is used to enforce law and order inside football grounds and protect spectators. In recent years there has frequently been a subsidy to cover the cost of policing inside football grounds. I hope that the Football Trust, which has presented the better part of £20 million to football over the last 10 years, can play its part. I welcome what it has done so far.
The hon. Gentleman referred to police duties both outside and inside football grounds. I must remind him that the cost of policing is a matter for the football authorities and the individual clubs to decide with the local police force.

Mr. Rob Hayward: Is my hon. Friend aware that the last city which Millwall supporters broke up was Bristol, particularly causing severe damage to the Bristol, South constituency, represented by the Opposition's Chief Whip, and that the general view now held in Bristol is that it is about time the Government took


action? It is no use my hon. Friend saying that the Government are asking for action from the Football Association. The Government have the power, as they proved during the coal strike, to take action against people intent on violence.

Mr. Macfarlane: There is a joint responsibility in which, as I have acknowledged over the years, the Government have a part to play. But the umbrella organisation — the Football Association — and the Football League and the individual clubs also have a major role in all the activities.

Mr. Clement Freud: In view of the previous question and Millwall's reputation for having violent supporters, does the Minister agree that there is no excuse for the police being as unprepared as they were yesterday? Does he accept that there is a relationship between the convenience of a sports ground and the behaviour of supporters? Will he do something to allow sports grounds to make their pitches more agreeable places to visit?

Mr. Macfarlane: I understand the hon. Gentleman's concern, and that is something at which we shall be looking closely in the light of the chief constable's report. We must find out what discussions took place between the two clubs and the police force responsible for policing in the Luton area last night.

Sir Hector Monro: I thank my hon. Friend for his prompt action in calling for reports from the Football Association and the police as a result of this disgraceful affair which some might call sport. Will he give serious consideration to banning the sale of alcohol at English football grounds? The impact of that in Scotland has dramatically reduced crowd misbehaviour, and he should think seriously about bringing in legislation now.

Mr. Macfarlane: I am well aware of the success that has been achieved in Scotland as a result of the inclusion of that ban in legislation. The interdepartmental working group of the four Departments of State which wrote up the report on football spectator violence last year acknowleded that. I can only hope that if legislation is to be introduced at some future stage, in the interim clubs will not fail to remove alcohol from sale inside and outside the stadium.

Mr. Roger Stott: The Minister will probably not be aware that my hon. Friend the Member for Sheffield, Central (Mr. Caborn) and I were at St. Pancras station at 4.10 pm yesterday, and that even at that early time there were at least 200 or 300 Millwall supporters, most of whom were drunk and many of whom were throwing beer over passengers, behaving in a loutish, hooligan fashion and terrorising most of the people on the platform. It was fairly obvious to those at St. Pancras last night that if that lot got on a train and were deposited at Luton there was bound to be trouble.
If it is possible for the Government to assemble a large police force to stop striking miners from going to persuade their colleagues in Nottingham or others on picket lines, it should have been possible for the police to turn out at Luton last night and prevent some of those hooligans from getting off the train and doing what they did to the constituents of the hon. Member for Luton, South (Mr. Bright).

Mr. Macfarlane: That is a matter for close co-operation between the transport police and the county

constabulary. That is one of the things I shall want to look at closely. I accept the deep distress that many must have suffered, but that is not an isolated matter. We have to look at many things and that is one of the things that we shall consider in the report on spectator violence. I hope to make an announcement shortly.

Mr. Mark Carlisle: Does my hon. Friend agree that what happened last might is not the Government's responsibility, nor that of the clubs, but is that of individuals who involve themselves in blatant criminal behaviour? Will he make it clear that society as a whole requires and expects that those who behave in that way will be severely dealt with?

Mr. Macfarlane: Yes, I certainly underline my right hon. and learned Friend's comments. Over the past three or four years we have emphasised and underlined that aspect. That is why in 1982 we passed the Criminal Justice Act, which provides a range of new sentencing powers, and they must be used.

Mr. Denis Howell: Why has the Minister's statement today referred to the responsibility of everybody else but not of the Government? As the Minister has been saying throughout the day that last night's problems and last week's problems in Chelsea were in every way predictable, why is he taking initiatives today which he should have taken last week?
Where is the Home Secretary in all this, especially as he has special responsibility for the metropolitan area, which includes Chelsea and Milwall? Why has he been impotent and silent in the past few months, when this problem has been gathering momentum once more? What resources do the Government intend to provide in the form of financial assistance to grounds to make them safe?
As the Home Secretary and the Prime Minister mobilised the entire national police force to deal with the miners' strike, why do they not do the same to deal with these rampaging mobs, which are a national scandal? Will the hon. Gentleman point out to the Football Association that, although we have every sympathy with football and the clubs concerned, we expect severe action over the clubs around which these criminals mobilise their activitives?
During the past year I have twice stated—and my right hon. Friend the Leader of the Opposition did so again during Prime Minister's Question Time—that this is a national problem that requires a national solution. On behalf of the Opposition I have offered the Government every support in introducing new legislation to take effective action and have offered to make our experience available to the Government, so why have they not responded in any way?

Mr. Macfarlane: That is an astonishing series of comments from the right hon. Gentleman. Many of these problems took root during his 11 years of office. He well understands some of them, so it ill behoves him to start making criticisms about lack of action. The Government have always tackled this problem seriously, in partnership with the football authorities. It must be tackled in partnership with them. In 1982, before the World Cup, I set up a liaison group with the Football Association and the other interested bodies. I also circulated in 1983 the blueprint of precautions to be taken by the 92 league clubs.
Last year, in consultation with the 23 other Council of Europe Ministers, I created the European agreement. Many of those proposals are working.
However, we must find out what went wrong last night and last week, and why the problem is largely confined to London. I shall leave no stone unturned to ensure that the game retains itself as Britain's foremost sport.

Business of the House

Mr. Neil Kinnock: Will the Leader of the House state the business for next week?

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY 18 MARCH—Until seven o'clock, debate on a motion on European Community proposals for the 1985–86 common agricultural policy prices.
The relevant document numbers will appear in the Official Report.
Afterwards, motions relating to the National Health Service (General Medical and Pharmaceutical Services) Amendment Regulations for England and Wales and also for Scotland.
TUESDAY 19 MARCH — My right hon. Friend the Chancellor of the Exchequer will open his Budget Statement.
European Community documents relevant to the budget debate will be shown in the Official Report.
The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.
WEDNESDAY 20 MARCH—Continuation of the Budget debate.
THURSDAY 21 MARCH—Continuation of the Budget debate.
FRIDAY 22 MARCH—Private Members' motions.
MONDAY 25 MARcH—Conclusion of the debate on the Budget Statement.

[Debate on European Community proposals for the 1985–86 CAP prices on Monday 18 March 1985:

Relevant Documents


1. 4582/85
CAP Prices (1985/1986)


ADD 1



ADD 2 &amp; COR 1(e)



ADD 3



2. 4637/85
Situation in Agricultural Markets (1984)


3. 6248/84
Designation of Milk and Milk Products


4. 11172/84
Starch production refunds


5. Unnumbered
Aid to German farmers

Relevant Reports of European Legislation Committee

1. HC 5-xiv (1984–85) para 1.
2. HC 5-xiv (1984–85) para 1.
3. HC 78¼-xxix (1983–84) para 1.
4. HC-xii (1984–85) para 1.
5. HC 78-xxxiii (1983–84) para 11.

Debate on Budget Statement on Tuesday 19 March 1985

Relevant Documents


1. 10277/84
Annual Economic Report 1984–85


2. Unnumbered
Annual Economic Report 1984–85 (final version as adopted by the Council)

Relevant Reports of European Legislation Committee

1. HC 5-iv (1984–85) para 7.
2. HC 5-viii (1984–85) para 5.]

Mr. Kinnock: I am grateful to the right hon. Gentleman. As many hon. Members on both sides of the


House will want to take part in Monday's debate on the NHS limited list, the Government's decision not to provide a full day's debate for the motions is quite unjustified. Will the right hon. Gentleman give the matter further consideration so that the interest in that issue can be fully reflected in a whole day's debate?
Last week the right hon. Gentleman agreed that the proposed closure of one third of Britain's network of skillcentres was an important topic for debate in the House. Is he yet in a position to say when that debate is likely to take place in Government time?
Is the right hon. Gentleman aware that 50 directors of the major theatres in Britain met this week to pass a vote of no confidence in Arts Council policies? In view of that, and of the many other expressions of genuine concern, will the right hon. Gentleman ensure that the Government provide time for a debate in the House on the multiple problems now facing theatres, and the arts in general, as a direct consequence of Government policies?
Can the right hon. Gentleman assure the House that there will be a debate on foreign affairs in Government time in the near future?

Mr. Biffen: I note what the right hon. Gentleman has said about Monday's debate on the National Health Service limited list. Of course, since he makes the request, that must be a matter for further consideration through the usual channels. As things are planned, the debate can run until midnight. I hope that, on reflection, he will be persuaded that that is just and equitable.
As to a debate on skillcentres, I am unable to elaborate on what I said last week. The right hon. Gentleman will appreciate that this is the time of the Budget which takes up a great deal of immediate parliamentary time.
I note the right hon. Gentleman's comments upon the Arts Council policies and the excitement they have caused among certain elements. Since most of the problems that affect the arts world are attributed to the mean-mindedness of the Treasury, it is possible that they will feature in the debates following the Budget.
I take account of what the right hon. Gentleman said about the necessity for a debate on foreign affairs. In the context of the recent change in the leadership of the Soviet Union, it would be appropriate to have such a debate, and I hope to arrange it fairly soon.

Mr. Teddy Taylor: When will we get a statement on the bid for the House of Fraser company? Is it not desperately unfair to Lonrho that its bid some time ago was referred immediately to the Monopolies and Mergers Commission while consideration of a bid by some strange Egyptians has been delayed while they mop up shares in the market?

Mr. Biffen: I hope my hon. Friend will appreciate that I should like to give him a tentative rather than an authoritative reply. I believe it will be indicated this afternoon that the bid now on offer will be allowed to proceed and that the constraints upon Lonrho have been lifted.

Mr. Jeremy Corbyn: Is the Leader of the House aware that last week 15 local authorities in England were unable to set a rate for the forthcoming financial year because of the rate-capping legislation that was forced through the House and the damage that that legislation and the cuts it will impose would do to those

communities, one of which is the borough I represent in the House? Is the right hon. Gentleman further aware that yesterday, on behalf of all the rate-capped authorities that have been unable to set a rate—

Mr. Douglas Hogg: Unwilling.

Mr. Corbyn: —Councillor David Blunkett, the leader of Sheffield council, wrote to the Secretary of State for the Environment asking for a meeting collectively of those authorities with the Government so that the Government's response to the massive support in those communities could be made publicly and openly? Does he not believe that there should be an urgent debate on this key area of Government attacks on the poorest people in the country?

Mr. Biffen: The hon. Gentleman presented the case that those authorities were unable to set a rate. He was interrupted by my hon. Friend the Member for Grantham (Mr. Hogg), who said that they were unwilling to do so. My hon. Friend was right in his analysis of the situation. No provision has been made for such a debate next week. Since the matter refers to an authority which is also part of the constituency of the hon. Member for Islington, North (Mr. Corbyn), he might try to push his initiative with an Adjournment debate.

Mr. Robert McCrindle: In view of the importance, both to the providers of financial assistance and to prospective investors, of the recent White Paper on investor protection, can the Leader of the House confirm that we can expect a debate on the White Paper before legislation is introduced in the next parliamentary Session? Can he say when that debate is likely to take place?

Mr. Biffen: It would certainly be desirable that there should be a debate on the White Paper before we proceeded with legislation, but I fear that I cannot be specific about the likely date.

Mr. Roy Hughes: Is not the latest outburst of crowd violence at soccer matches an indication of the general discontent in society? Is it not a fact that our young people are being brought up in a land of no hope? May we have an early debate on the whole question as it affects society?

Mr. Biffen: There are many football clubs in major urban areas which suffer social deprivation which have a spotless record on the behaviour of their supporters. I do not think we should make easy generalisations about the topic. I agree with the hon. Gentleman that it is a matter of real interest. I take note of the request for a debate, although I cannot take the matter further this afternoon.

Mr. Nicholas Winterton: I make few demands upon my right hon. Friend. Will he give further thought to the request by the Leader of the Opposition for a full-day debate on the limited list? It is of great interest to many hon. Members in all parts of the House
With regard to requests that have been made before, will my right hon. Friend find time for an early debate upon the Public Accounts Committee report on the De Lorean affair, in which I have a personal interest, and also on the Silberston report and the need for the House to have a full debate so that Ministers may be aware of the views of the House on the need to renew the multi-fibre arrangement?

Mr. Biffen: My hon. Friend may not think that he makes many demands upon me. His good opinion is something I for ever nurse, albeit mostly in vain. He would not expect me to go further in response to him than I have done in response to the Leader of the Opposition on the debate on the limited list, but it is an important point.
With regard to the De Lorean debate, I gave an indication that we were looking forward to such a debate when I made the business statement last week.
As to the point about the multi-fibre arrangement, I note my hon. Friend's interest in the topic, but again I cannot go beyond what I said last week.

Mr. Charles Kennedy: With regard to Monday's limited list debate, is the Leader of the House aware that in evidence to the Joint Committee on Statutory Instruments on Tuesday this week an official of the Department of Health and Social Security openly admitted that the Scottish list was completely inadequate because it had been drawn up in a hurry? That being the case, does the Leader of the House— [HON. MEMBERS: "Hear, hear."] I am grateful for the support; it is uncharacteristic. Does the Leader of the House think it reasonable to ask the House to approve the Scottish list when the DHSS itself is admitting that the list is wrong?

Mr. Biffen: I am grateful to the hon. Gentleman for raising the point. It is one of substance. So that we may have numerical perspective, I should point out that we are talking about a difference between the list for England and Wales, on the one hand, and the Scottish list, on the other, of approximately three items out of something like 6,000. I shall draw the point to the attention of the relevant Minister so that he may deal with it in Monday's debate.

Mr. Michael Latham: Will my right hon. Friend's acute political antennae tell him that Monday's debate on the limited list may proceed more smoothly if the Secretary of State starts by announcing details of an appeal procedure which on Tuesday he half hinted he had in mind?

Mr. Biffen: I shall make certain that my right hon. Friend is apprised of that point.

Several Hon. Members: rose—

Mr. Speaker: Order. I remind the House that there is to be another statement and then two important debates, which must end at 10 o'clock. I ask hon. Members to put their questions briefly. I shall do my best to call them all.

Mr. Max Madden (Bradford, West): In view of the extensive effort of Home Office Ministers to rubbish the report of the Commission for Racial Equality on immigration control, can the Leader of the House give a clear assurance that he intends to provide time for the findings and recommendations in the report to be debated in the House?

Mr. Biffen: I shall certainly consider that as something appropriate for discussion through the usual channels.

Mr. Geoffrey Dickens: Will my right hon. Friend accept that the football violence that we have been experiencing is the responsibility of three Departments — Transport, the Department of the Environment and the Home Office? I believe that the House is entitled to a full debate on the subject because it is of national importance. Many of us close to Football League clubs feel that we have an input.
We have read all the reports and statements. None of them is impressive. We feel that we could add to them, and we should like an opportunity to do so.

Mr. Biffen: The hon. Member for Newport, East (Mr. Hughes) has already asked about the possibility of a debate on the subject and I take to heart the fact that his voice is joined by that of my hon. Friend. I give no undertaking, but I note the interest in the topic.

Mr. Robert Parry: Will the Leader of the House consult the Foreign Secretary about early-day motion 504, which deals with military manoeuvres in south Korea?
[That this House condemns the Team Spirit 1985 manoeuvres in South Korea which include the mobilisation of 200,000 troops from the United States of America and South Korea; believes that these moves destroy the dialogue which was instituted between North and South Korea by talks on the peaceful re-unification of the Peninsula; and calls upon Her Majesty's Government to support tripartite talks to achieve this objective.]
This Government's policy, like the previous Government's, is to support the peaceful reunification of Korea. The current war games have stopped the dialogue between the north and south of Korea and have caused tension in that part of the world.

Mr. Biffen: I shall draw the attention of my right hon. and learned Friend the Foreign and Commonwealth Secretary to that motion.

Mr. Tim Smith: Is my right hon. Friend aware that his flexibility in rearranging Monday's business so that we may have a five-hour debate on the limited list is welcome? When can we expect to consider the Report stage of the Social Security Bill?

Mr. Biffen: I cannot say. The importance of that legislation is fully recognised. I hope that I will be able to give some hopeful news soon.

Mr. James Lamond: Now that the Prime Minister is scrambling aboard the peace and disarmament bandwagon, why does not the Leader of the House do himself some much needed good by inviting the right hon. Lady to make regular statements to the House about how the various peace talks in Stockholm, Vienna, Geneva and elsewhere are progressing? Why does he not encourage the right hon. Lady to make regular statements about her policy on that topic?

Mr. Biffen: I shall inform my right hon. Friend the Prime Minister that she has enlisted a new and unexpected member of her fan club.

Mr. Andrew Rowe: Is my right hon. Friend aware that many Government Members believe that he does not need to do himself that type of good? Is he aware of the Swann report, published today? Is there any prospect of having a debate on it?

Mr. Biffen: The moment that I am released from my present toils a statement will be made on the Swann report.

Mr. Andrew Faulds: Will the right hon. Gentleman take on board the need, adumbrated by my right hon. Friend the Leader of the Opposition, for a specific debate on the problems facing the arts and heritage world? It is not good enough to try to push off such matters into a generalised debate in the lost limbo of the Budget.

Mr. Biffen: I take note of that. My earlier references to the arts world and the Budget were made hopefully—but they were not much more than that.

Mr. Peter Bruinvels: Is my right hon. Friend aware that violence, which already takes place on the football fields, has spread to my surgery? At my last three surgeries in Leicester my wife and I have been subjected to severe disruption and threats. My ethnic community officer has been almost beaten up. Will my right hon. Friend please provide time for a debate so that right hon. and hon. Members may be protected in their surgeries when they are trying to do a job to help the community and their constituents?

Mr. Biffen: My hon. Friend has made a serious point. We spend quite a lot of time talking about the privileges of this place and the House will wish to reflect upon my hon. Friend's remarks. I hope that he will not think that I am being dismissive, but I can see no early opportunity of a debate in Government time.

Mr. Tam Dalyell: Will the right hon. Gentleman have a rapid word with the Secretary of State for Education and Science and ask him when we are likely to have a statement on the future of the British subscription to CERN, the high energy physics centre at Geneva?
As a matter of parliamentary foresight, can the right hon. Gentleman cast his mind forward to Thursday when a response will be announced to the Foreign Affairs Select Committee report on the Belgrano? Would it not be useful to have a detailed reply to the book published yesterday by Mr. Clive Ponting? In the absence of a detailed reply to the charges of deception, will the Government, the Prime Minister and Ministers sue?

Mr. Biffen: On the first question, lightning itself could not be faster than the transmission of the hon. Gentleman's words to my right hon. Friend the Secretary of State, who is on the Front Bench.
On the second matter, I have not much more to add to what was said in the recent debate on the sinking of the

Belgrano. I take note of what the hon. Gentleman says about the modalities that might surround the publication of the departmental Select Committee report.

Mr. Douglas Hogg: As one who pressed for an enlarged debate on Monday, I am grateful for the extension of the debate to five hours.
Does my right hon. Friend agree that there is considerable anxiety in the rural areas about the proper objectives of agriculture policy? Will he consider arranging a general debate on agriculture so that we can express views about the proper range of British agriculture policies?

Mr. Biffen: Since I have a broadly similar constituency interest in the topic, I appreciate the interest in the Government's future policies. My hon. Friend might take an early opportunity to discuss the matter when we debate the common agricultural policy. We cannot discuss domestic policy without taking that into account.

Mr. Alfred Dubs: My hon. Friend the Member for Bradford, West (Mr. Madden) asked for a debate on the Commission for Racial Equality report on immigration control procedures. The Leader of the House said that he would consider that possibility. Was that a slip of the tongue since two or three weeks ago he said that he was already considering the possibility of such a debate? When will that debate take place?

Mr. Biffen: I shall carry on considering.

Mr. Robert Maclennan: Does the Leader of the House recognise that by dropping the proposed debate on the limited list on Monday — which is desirable in itself to give the Government time to come up with a proper review procedure agreed with the medical profession — he would also provide an opportunity for a proper pre-price fixing debate instead of a truncated debate ending at 7 o'clock?

Mr. Biffen: The House has accepted the motion which sets the terms for debates on Monday. A reasonable and equitable judgment has been made about what are always difficult and competing claims.

Ethnic Minority Children (Education)

The Secretary of State for Education and Science (Sir Keith Joseph): With permission, Mr. Speaker, I wish to make a statement about the final report, published today, of the committee of inquiry into the education of children from ethnic minority groups. Also published today is a guide to the main issues in the report written at my invitation by the chairman, Lord Swann, which I am arranging to be sent to all schools. Copies of both documents are available in the Vote Office.
The Government are profoundly grateful to the chairman and members of the committee for their long and dedicated labours on an issue of crucial importance. We believe that we have a duty to the House, to the ethnic minorities, and to the nation as a whole, to declare immediately where we stand on this issue.
The Government accept the committee's finding that many ethnic minority pupils are achieving below their potential and recognise the concern that is felt about this among their parents. We shall strive to improve the position through three broad lines of policy.
First, under-achievement is not confined to the ethnic minorities. Many in the majority community could be doing far better, and I am determined that they too should be helped, wherever they are at school. As the House knows, our policies for schools are designed to raise the performance of all pupils and to tackle the obstacles to higher achievement which are common to all. These policies apply to all pupils irrespective of ethnic origin. As they bear fruit, ethnic minority pupils will share in the benefit.
Secondly, we are determined to give ethnic minority pupils the same opportunity as all others to profit from what the schools can offer them. We are tackling the obstacles to opportunity, notably by promoting good practice in the teaching of English as a second language.
Thirdly, we want the schools to preserve and transmit our national values in a way which accepts Britain's ethnic diversity and promotes tolerance and racial harmony. Whether or not a school contains ethnic minority pupils, its ethos and curriculum should promote understanding and respect among all its pupils for the different ethnic groups which now contribute to our national life.
These three lines of policy are being supported by a number of measures. I have referred to the steps the Government are taking to raise pupil achievement generally. The need to take account of the ethnic diversity of our society has been written into the new criteria which will govern initial teacher training and the GCSE examinations, and will be incorporated in the objectives for the relevant subject areas of the school curriculum which we are formulating in co-operation with the education service. The same need lies at the heart of a group of projects, totalling some £1 million in 1985–86, which will be supported through the new education support grant scheme, and of some urban programme projects. I shall propose to the local authority associations that from 1986–87 onwards the in-service training grant scheme should include training dealing with the need to respond to ethnic diversity. Meanwhile in English language and mother-tongue teaching the good practice endorsed by the committee will continue to be encouraged and disseminated by Her Majesty's Inspectorate and

supported by grants made by my right hon. and learned Friend the Home Secretary under section 11 of the Local Government Act 1966. These measures are essentially designed to change attitudes; they will not entail an increase in local authority expenditure as a whole.
Policy for the good education of ethnic minority pupils needs information which is adequate to measure and secure progress. Some local authorities already collect information on pupils on an ethnic basis. As the committee's interim report recommended, I have been exploring with the education service and the ethnic minorities the collection of ethnically based statistics on school pupils. There are legitimate concerns and practical difficulties. I hope that soon, however, this work will come to a successful conclusion so that all local authorities can operate acceptable and mutually compatible schemes which respect confidentiality. The committee recommended that, without positive discrimination and without any reduction in the required level of qualification, an increase in the proportion of ethnic minority teachers should be sought. The Government accept this recommendation. I intend to consider with the education service and the ethnic minorities how it might best be pursued. I shall consult about the possibility of establishing acceptable arrangements for the collection of statistics on ethnic minority teachers and students in teacher training, as the committee also recommends.
We badly need more hard information about the effect on achievement of factors in and out of school. I intend to commission research which will look at these factors and at the extent to which they contribute to underachievement among pupils of all backgrounds. Ethnic minority pupils would be one part of such a study.
The report contains many detailed recommendations which I will consider in consultation with those concerned in the education service and outside it. I shall also consider what might be done in these matters in further education, which was outside the committee's remit. But, to forestall unfounded fears or hopes, the Government wish to make it clear that they cannot accept four recommendations in the report. We do not intend to change the present statutory requirements for daily collective worship and for religious education in maintained schools. Nor do we wish in any way to call in question the present dual system of county and voluntary schools. It remains our policy not to extend mandatory student awards to any form of study which precedes higher education, and we see no immediate prospect of legislation to amend section 11 of the 1966 Act.
These four matters are not at the heart of this issue. It is the policies and practical actions which I have outlined that offer the best prospect of mobilising the combined efforts of the education service to the vital but difficult task of reducing under-achievement at school and promoting good education in our multi-ethnic society.

Mr. Giles Radice: The Opposition welcome the Swann report as a valuable guide to what must be done to ensure that all our children fulfil their potential at school. However, is the Secretary of State aware that parents will be expecting action from him, not just the elegant waffle that we have just heard? They will want to know what—in contrast to the Government's very weak response to Rampton—the Government are going to do about the Swann report. Is the right hon. Gentleman aware that they will want to know what the


Government intend to do to provide genuine equality of opportunity in our schools; to ensure that the school curriculum reflects the values of our multicultural society; to root out the racism which, as Swann shows, blights the prospects of many black and Asian children? Does the right hon. Gentleman understand the simple point made so clearly in the Swann report that initiatives in this area will require extra resources? We cannot ensure a good education for all our children without paying for it. As usual, it is bricks without straw.

Sir Keith Joseph: The Government have already announced a large number of policy changes concerned with the objectives of the curriculum, examinations, teacher training and records of achievement, to list only a few. All these things are highly relevant to under-achievement in all our population, including ethnic minorities. Those changes will come into effect over the next two or three years and will, I hope, be of benefit to all.
The hon. Gentleman has allowed himself to speak in far too absolute a fashion about what he calls "racism". He does an injustice to the teaching force, whose members are dedicated to the service of individual children and in whom I have seen precious little evidence of any racist prejudice. I ask the hon. Gentleman and the House to accept that, apart from the general policies to reduce under-achievement to which I have already referred, the Swann report is asking us to deal with the most difficult of all issues—attitudes. I have announced that we are taking what steps seem practicable, emerging from the Swann report, to tackle those attitudes and I do not think that resources are in any way the prime need.

Mr. Mark Carlisle: As the person who was responsible for asking Lord Swann to take on the chairmanship of this committee, I wish to add my thanks to those given by my right hon. Friend to Lord Swann for his willingness to take on this job. I suggest that, had he realised at that time the enormity of the task that he was entering upon, he might have been slightly more hesitant.
I welcome what my right hon. Friend has said about his decision not to interfere with the role of the voluntary schools. Does he agree that if we are to achieve in education equality of opportunity for all people of all ethnic groups—as the hon. Member for Durham, North (Mr. Radice) said—the most important recommendation of all relates to the teaching of English to those for whom it is not their first language?

Sir Keith Joseph: I agree with my right hon. and learned Friend. I doubt whether even he guessed, let alone warned Lord Swann, what an enormous task he was being asked to undertake. I agree, too, about the prime importance of the learning of English and that is why it featured among the first things that I said in my response.

Mr. Clement Freud: Will the Secretary of State promise that as a result of this long, detailed and good report we shall, within the course of the next year at least, have an opportunity to debate it in the House? I totally agree with him that this is a question of attitudes. Would he make it easier for teachers to gain some understanding by, for instance, making it obligatory to have a probationary or training period in schools which contain children from the ethnic minorities? Finally, I ask

him particularly to look again at the Swann report recommendation on the educational under-achievement of West Indian children and to recognise that general solutions are useless when it comes to specific problems.

Sir Keith Joseph: My right hon. Friend the header of the House will be made aware of the hon. Gentleman's suggestion about holding a debate. There are Supply Days and the Opposition may wish to contribute a day of their own to the debate. I shall follow up the hon. Gentleman's suggestion that probationary teachers should spend a period in schools with ethnic minorities. On West Indians' special needs, the Swann committee reveals a certain paradox. There is a differential record of achievement among different groups of ethnic minorities and, indeed, within those groups.

Mr. Harry Greenway: Is my right hon. Friend aware that, during my 23 years of teaching in London comprehensives, I taught children from overseas with 65 foreign languages between them? In my last school of 2,000 students, 700 of the children were black or coloured. The job done by the teachers was admired by people in all circumstances who determined that their work was free from racial prejudice of any kind. I welcome the credit my right hon. Friend has given to the teaching profession in doing that job.
Will my right hon. Friend accept that there will be a warm welcome across the country for his determination to refuse the Swann suggestion that morning assemblies should be changed and his determination that religious education should be strongly maintained? Is my right hon. Friend aware that the best way to overcome racism in any school is to give every child equal treatment? There is no other way. I welcome my right hon. Friend's statement that we want more teachers from ethnic minority backgrounds. I advanced that idea many years ago. Does my right hon. Friend accept, however, that every teacher, from whatever background, must be well qualified and well able to do the job?

Sir Keith Joseph: I agree with my hon. Friend, but I think that this country faces a particular problem to which the Government are addressing themselves — under-achievement in the majority community as well as in the ethnic minorities. That is why the Government introduced the low attainers programme, with extra money from the taxpayer. That is why we shall commission more research, as I said in my statement.

Mr. Sydney Bidwell: I understand that the right hon. Gentleman, with his background and record, would have the same desire as I have to want children of ethnic minority communities to have a fair crack of the whip. I suggest that educational opportunity cannot be isolated to the narrow confines of education—it has, above all, something to do with home life. The right hon. Gentleman has talked about wanting the children of the majority community to achieve more. In areas such as mine, white children are sometimes in the minority, not the majority. Better homes, increased expenditure on housing and facilities to do homework are needed, because such areas are grossly overcrowded. There cannot be equality of opportunity without facing those issues. The right hon. Gentleman's Government is seriously remiss in that respect.

Sir Keith Joseph: There is some common ground between the hon. Gentleman and me, but I hope that he will agree that what the Government can do is relate education to what people can do for themselves.

Mr. Andrew Rowe: Does my right hon. Friend accept that not just the Opposition have an interest in debating this important subject? It is already clear from exchanges across the Floor of the House that misunderstandings about the report are growing and leading to danger. Does my right hon. Friend also accept that perhaps the central feature of the whole report is the statement that attention must be paid to the curriculum and the operations of schools that have virtually no ethnic minority pupils? Does my right hon. Friend accept that many schools where the most useful, exciting and demonstrably effective work has been achieved are substantially ignored by the education press and many people making educational policy, because those schools cater for children for whom achievement is measured in much lower grades than the normally accepted targets? Because our system gives far too much credit to academic achievement alone, these demonstrable achievements are neglected.

Sir Keith Joseph: I respect the sensible ardour of my hon. Friend who was a member of the committee. I should be grateful if he would add to what he has said by telling me, in any form he wishes, the names of some of the schools whose work he thinks is underestimated. In that way I shall learn from him.

Mr. Max Madden: Although there will be general agreement with the Secretary of State that we need more information, will the hon. Gentleman accept that the fact that he has not announced substantial new resources to deal with under-achievement will be regarded as a great tragedy? Will the right hon. Gentleman accept that in places such as my constituency, where half the schools in the inner city were built before 1903 and many schools are overcrowded, understaffed and underequipped, under-achievement is clearly linked with the unemployment, housing and poverty crises gripping the inner cities? Bradford council states:
To learn well, a child must feel that her or his background, family origins, religion and cultural patterns are respected. A child with low self-esteem cannot learn.
That is the problem of under-achievement. Does the right hon. Gentleman agree with that proposition?

Sir Keith Joseph: I think that the hon. Gentleman is deceiving himself if he thinks that the prime need is for resources. Indeed, the Swann committee does not say so. We face a considerable paradox, because substantial proportions of the ethnic minorities are achieving as well as— we are not satisfied with that standard either — substantial minorities in the majority community. The problem is that there is under-achievement in the majority community and differentially under-achievement in the ethnic minorities. The prime problem is not resources but the fact that some people manage to succeed on all sorts of terms with present resources, and some do not. We must ferret out what is happening. Further research is sought to help us.

Mr. Peter Bruinvels: May I reassure my right hon. Friend that in Leicester, which has a large ethnic minority community, Asians, especially those of

Moslem faith, are performing extremely well. They are not under-achieving in any way. Will my right hon. Friend examine the major problem, which I believe lies with the parents of these children, who need to be taught English as soon as possible? I am pleased that morning worship will continue to be encouraged in all schools.

Sir Keith Joseph: I hope that my hon. Friend will not fall into the fallacy of attributing one single factor as the cause. The Swann report contained healthy comments explaining that a single explanation will not suffice.

Mr. Greville Janner: Is the right hon. Gentleman aware that about 20 per cent. of Leicester's population are Asian citizens and that its education system requires congratulation? The city has absorbed those people in the face of the Government's refusal to provide additional resources, as needed, to cope with problems which are obvious when a city contains people from other cultures and backgrounds who speak different languages. Bearing in mind that the city is being rate capped and that the county education authority is run by Conservatives, who refuse to assist in that authority's work, will the right hon. Gentleman suggest some form of positive action to assist, rather than simply say, "Well, everyone is the same. People perform as best they can"? Will the right hon. Gentleman bear in mind especially the fact that Asian school leavers are discriminated against, as the Select Committee on Employment clearly found?

Sir Keith Joseph: Extra resources are provided under section 11, through the rate support grant, and in various other ways to deal with the type of problem to which the hon. and learned Gentleman referred.

Mr. Tony Marlow: I deeply respect the deep and valuable cultures and traditions which many of the ethnic minorities have brought to this country, but does my right hon. Friend accept that if he were to move towards a coherent, stable and integrated society the probability is that the majority of people in the United Kingdom would wish public money to be spent in such a way as to encourage one mother tongue, which is English, one culture, which is the culture of these islands, and the teaching of one history, which would be British history?

Sir Keith Joseph: I think that in general that is the Swann report's message. We are being told, and I think the whole House will agree, that the maintained education service should work as my hon. Friend says, while respecting the cultures of each separate group and the willingness of separate cultures to protect their continuity. It is true that the Swann report recommends that some attention should be paid to encouraging the mother tongue so that it may be a bridge towards the mastery of the English language. I ask those interested to read the cautious words in the Swann report about the mother tongue in the state system.

Rev. Martin Smyth: I welcome the statement and the interest shown in raising underachievement throughout the community, but should not attention be paid to home liaison, especially for first generation parents? As the report is not dealing with further education, is it not necessary to help parents to achieve the best objectives for their children?

Sir Keith Joseph: Yes, indeed. There is great scope, but it must be delicately done. I am glad to say that there are a number of such individual projects up and down the country from which I hope we can all learn.

Mr. Douglas Hogg: Does my right hon. Friend accept that almost the most welcome part of his statement is his evident determination to treat the main problem as one of under-achievement, rather than underachievement amongst ethnic minorities? We wish him to direct his principal effort towards under-achievement in general.

Sir Keith Joseph: I am grateful to my hon. Friend.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall endeavour to call those hon. Members who have been rising, but I ask them to be brief.

Mr. Tam Dalyell: Forgive my curiosity, but before the press conference this morning did the members of the committee all see and agree the abstract, which will be much more widely read than the full report? The abstract reflects Lord Swann's clear recommendation in para.4.11 that all schools should adopt clear policies to combat racism. Formidable a chairman as he is, are we sure that the other members of the committee agreed the all-important abstract?

Sir Keith Joseph: The responsibility for the brief guide written by Lord Swann falls on my shoulders, as I asked him to write it. As he says in the brief guide, he wrote it without consultation with the Committee, and no doubt each member of the Committee would emphasise a different factor. In his guide, the chairman explains the background to the report.

Mr. Eric Deakins: Why is the right hon. Gentleman so complacent about the extent of racism and racial prejudice in our society, which, in the view of the report, undermines the potential for achievement of ethnic minority children? Does the right hon. Gentleman agree with the report that schools must be much more sensitive to the needs of ethnic minority pupils? Will he say something about the Swann report's implications for teacher training,; in particular, that there should be some form of racist awareness training to ensure that racial prejudice does not exist among teachers?

Sir Keith Joseph: I distance myself from the kind of comments that the hon. Gentleman would evidently like me to make, because I think that the word "racism" is used as a relatively superficial alibi for what is a whole range of rather complicated issues. That is why it is necessary to have a little more research to discover why underachievement affects not just ethnic minorities, to different extents, but the majority community. We need to understand that, and "racism" does not begin to explain under-achievement in our society.

Mr. Nigel Spearing: The Secretary of State has undervalued resources. As Newham has a considerable ethnic minority school population, will he consider the case for individual resources for that borough if it is put up? On the point about British traditional values, do we not value human resources, and should we not therefore care for our teachers so that they can care for our pupils? Would that not be a much better way to combat the under-achievement of all our children?

Sir Keith Joseph: I am tempted to reply that teachers owe something to the children as well. I do not believe that their present behaviour—

Mr. Spearing: The community owes something to the teachers as well.

Mr. Tony Lloyd: Is the Secretary of State aware that if he emphasises the problem of underachievement across all groups in our society it makes his view that there are sufficient resources even more perplexing? If we study the schools in the inner city areas which ethnic minorities attend, we see that they are the schools which are becoming increasingly starved of resources as cuts in education and local authority spending take place.
Will the right hon. Gentleman also address himself to another reality of education in inner city areas with massively high unemployment, which is that it is difficult for children in our schools to believe that education is relevant if at the end of that education they see no opportunities for employment? With unemployment rates of well over 50 per cent. in my constituency, many children find it difficult seriously to believe that schooling has any long-term benefit.

Sir Keith Joseph: The hon. Gentleman should be aware that there is no link to be seen from the statistics between the amount of money that is spent and the value added to the children's education.

Ms. Clare Short: Oh, come on.

Sir Keith Joseph: The hon. Lady says, "Come on", but there is no link. Secondly, while accepting that unemployment is a misery in many areas, I must say, that if children emerge from school unadaptable and illiterate, they will have less chance of obtaining the jobs that will return.

Mr. Alfred Dubs: Granted what the Secretary of State has said about under-achievement in general affecting children over the whole community, is he aware that for a significantly large proportion of black parents the fact that their children leave our schools less able to compete in our society than white children causes the most enormous anxiety? Is he aware that in his statement this afternoon he has not shown that he fully appreciates the magnitude of the anxiety felt by black parents?
Secondly, will the right hon. Gentleman comment on some of the recent initiatives taken by the Inner London education authority on the lines of some of the report's recommendations before the report was made known?
Thirdly, while many of us understand that the Government will not make more money available for education, and the right hon. Gentleman has said that money makes no difference, will he look hard at the effects of the cuts in education, because there is a danger that many of them will have a disproportionately serious impact on the most disadvantaged—in many cases the black children—in our schools?

Sir Keith Joseph: The hon. Gentleman will find at the beginning of my statement that I paid tribute to the anxiety that many ethnic minority parents feel about underachievement. There is differential under-achievement within different ethnic minorities. That is the interesting and hopeful factor that I emphasise to the House. I have


often enough paid tribute to some of the work being done by ILEA, but I am not sure that I wish to pay tribute to every aspect of the work to which the hon. Gentleman refers.

Mr. Radice: Is it not a matter of astonishment that the abstract issued by the chairman has apparently not been approved by all members of the Committee? Is it not time that the Secretary of State quoted fairly from the Swann report, which makes it clear in paragraphs 2.3 and 2.4 that social deprivation and racial discrimination are major factors in ethnic under-achievement? As so often, the right hon. Gentleman pays lip-service to the principle of the report but is not prepared to do anything about it or to provide resources to see that it is implemented.

Sir Keith Joseph: If there is any criticism of the brief guide on the grounds which the hon. Gentleman mentioned, the fault is mine, because I asked the chairman at the last moment to produce a brief guide and there was not time, even if he had wished, to go through the processes of the committee. The brief guide carries within it an explicit statement that it is the chairman's summary, and it does not pretend to be a document to which every member of the committee would agree in every emphasis.
The Swann report refers specifically to racial prejudice in connection with housing and employment. There are general references in respect of education, but I do not believe that those references are justified by what I know of the schools service.
The hon. Gentleman plays a record when he refers to resources. There is a limit to resources. The presence of ethnic minority pupils is taken into account in the distribution of resources.

BILLS PRESENTED

HILL FARMING

Mr. Robert Jackson, supported by Sir Peter Mills, Mr. Edward Leigh, Viscount Cranborne, Mr. Mark Hughes, Mr. Andrew F. Bennett, Mr. Tom Torney, Mr. Ivan Lawrence, Mr. David Knox, and Mr. Robert Harvey, presented a Bill to extend provision made in section 20 of the Hill Farming Act 1946 for regulating or prohibiting the burning of heather and grass so as to include bracken, gorse and vaccinium: And the same was read the First time; and ordered to be read a Second time upon Friday 22 March and to be printed. [Bill 106.]

AGRICULTURAL TRAINING BOARD

Mr. Tom Torney, supported by Mr. Robert Jackson, Dr. David Clark, Mr. Stan Crowther, Mr. John Spence and Mr. Ron Davies, presented a Bill to make provision with respect to the functions of the Agricultural Training Board: And the same was read the First time; and ordered to be read a Second time upon Friday 22 March and to be printed. [Bill 107.]

Supplementary Estimates 1984–85

Mr. Teddy Taylor: On a point of order, Mr. Speaker. I seek your guidance—I shall do so briefly in view of the time—on what I regard as a vital issue of order relating to the Supplementary Estimates which the House will be required to approve tonight, without debate, at 10 o'clock?
Included in the Estimates is a provision for an additional sum of £364 million for the Common Market through the operation of advance payments in relation to our legal obligations. This new policy — basically, of member states offering the EEC a massive overdraft facility—is a controversial political issue, and you will be aware, Mr. Speaker, of the arguments which could be advanced but which I cannot raise on a point of order. Is it in order for a new, costly and controversial policy to be introduced by means of a non-debatable Supplementary Estimate? Our long tradition in the House is that Estimates should reflect agreed policies and legislation and not make new policy.
While Back Benchers know that they have your sympathy and concern at all times, Mr. Speaker, may I ask whether the Standing Orders preclude you from helping us? Is there any body or person to whom we could present this major constitutional issue, which undermines the power of Parliament and gives the Government, for the first time, the power to create new, costly policies without debate and discussion?

Mr. Donald Stewart: Further to that point of order, Mr. Speaker. At a time when many projects in Scotland have been turned down—I must not mention them when raising a point of order—it seems an outrage that funds of this magnitude should be agreed to on the nod. The House should have the right to debate the matter and say whether the expenditure should be approved.

Mr. Jonathan Aitken: Further to the point of order, Mr. Speaker, which was raised so well by my hon. Friend the Member for Southend, East (Mr. Taylor).
It is totally contrary to the conventions of the House that a major policy initiative should be introduced in what must be seen, whatever one's views on it, as something of an underhand and undercover manoeuvre through the Supplementary Estimates procedure. I ask you to defend the rights of hon. Members in all parts of the House by ruling against the unconstitutionality, in parliamentary terms, of such a measure.
This Supplementary Estimate may itself be unconstitutional in terms of our relationship with the treaty of Rome and the European Assembly. Under the treaty of Rome, it is the European Assembly, and that Assembly alone, which has the power decisively to accept or reject the EEC budget.
If it is possible for the national Parliament of a member state to circumvent the rulings of the European Assembly by introducing an overdraft facility in this way, in plain man's language, it is the equivalent of a bank manager suddenly granting an overdraft of £364 million without the authority and consent of the bank. I suggest that, in European legislation terms, this is an unconstitutional procedure, and I ask you to consider that when you rule on my hon. Friend's point of order.

Mr. Tony Marlow: Further to that point of order, Mr. Speaker. I will quote a short extract from some remarks made by the Prime Minister, who is normally right and was probably right when she said—

Mr. Speaker: Order. I cannot be responsible for what is said from the Government Front Bench.

Mr. Marlow: Article 199 of the treaty of Rome provides that the revenue and expenditure shown in the budget shall be in balance. It is not right, therefore, to raise loans for budgetary purposes. To do so would be contrary to that article. Thus, it would be wrong for this House to agree a loan to the European Community when, to do so, would be in conflict with an article of the treaty.
The European Community has promised to pay to this country last year's rebate of £600 million. It would seem improper for us to agree to this expenditure in advance of that repayment being made. To make a loan before getting our money back is a matter which should exercise the minds of hon. Members and, accordingly, we should have an opportunity to debate the issue.

Mr. Speaker: I assure the hon. Member for Southend, East (Mr. Taylor) that I have given careful thought to the points to which he made reference. He was kind enough to give me advance notice of his point of order, and that enabled me to look into the matter with great care.
I am, of course, bound by the Standing Orders. I must make it clear that the decision whether to vote the sums included in today's Supplementary Estimates will be a matter for the House, and therefore it will be possible for hon. Members to vote against them if they do not like them.
The issues raised by the hon. Member may be considered by Select Committees, and some of those issues have been reported on by the Select Committee on the Treasury and Civil Service. Questions about the propriety of authorising a new policy by way of a Supplementary Estimate, to be included in a Consolidated Fund Act, can be drawn to the attention of the Committee of Public Accounts.
It is also open for individual hon. Members to propose to the Liaison Committee that it should recommend particular Estimates for debate on Estimates days. Today, however, the House must reach its decision on the Supplementary Estimate, in accordance with Standing Order No. 19, and that precludes debate or a separate Division, I regret to say, on the amendment standing in the name of the hon. Member and his hon. Friends.

Mr. Teddy Taylor: Thank you, Mr. Speaker.

Estimates Day

[2ND ALLOTTED DAY]—considered.

SUPPLEMENTARY ESTIMATES 1984–85

Class IV, Vote 5, Energy Industries

Industrial Support

Relevant document: Energy Committee Fifth Report, House of Commons Paper No. 234, Session 1984–85.

Motion made, and Question proposed,
That a supplementary sum not exceeding £20,000,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in the course of payment during the year ending on 31st March 1985 for expenditure by the Department of Energy in connection with the energy industries including related research and development, selective assistance to industry, energy conservation, oil storage, and certain other services including grants in aid and an international subscription. —[Mr. Buchanan-Smith.]

Mr. Ian Lloyd: When my Committee presented its fourth report on the Winter Supplementary Estimates, we indicated as clearly as we could that we should be most concerned were another Supplementary Estimate to be placed before the House, unless the Government made a more frank statement on their policy of using BNOC's participation agreements to support the price of oil.
That forms the main basis of our fifth report, which I have the honour to present today. In doing so, the House will expect me now to alter the emphasis which I would otherwise have placed on our further analysis and the conclusions we reached in the light of the statement made by the Minister of State yesterday afternoon.
In that context, I shall make three preliminary observations. The first is that my Committee, in its report, did not recommend the abolition of BNOC, and I think that is clear. My personal judgment is that the Government's action is fully justified by the evidence presented to us and that it resolves an awkward dilemma, though I fully understand that some members of my Committee on the Opposition Benches will not share that judgment or conclusion. They march to a different drummer on this issue, although I like to believe that, for the most pan on most energy issues, we march in step.
Secondly, the House will waste a valuable opportunity this afternoon—one that is rarely granted to us—if we are tempted to indulge in what I can only describe as an ex post facto, yahboo debate in which we endeavour to score party political points on the basis of who said what, when and where. There is, alas, all too much opportunity to do that, and no doubt we shall have further opportunities when the BNOC legislation is eventually placed before the House.
Thirdly, I hope the House will take note of the fact, which is not without significance, that the Government have responded directly, rapidly and unequivocally to a Select Committee report. It may be, as one City editor described it this morning, a "milk and water report," but I hope I may be permitted the ironic reflection that if this is the action that follows a glass of milk and water, heaven


knows what the Government might have done had we presented them with a stronger drink. Although our recommendations may have been limited, if not muted, the evidence was of outstanding interest and significance, and the analysis was rigorous and effective, despite the limited time in which we had to work.
We have been considering the tip of a large and substantial iceberg, and, to a large extent, the size and significance of the iceberg beneath the surface of the two Supplementary Estimates compelled the Committee to examine it. In relation to modern national budgets, when Treasury officials can cheerfully lose £100 million in what they describe as a rounding-up procedure, £70 million may be small beer—

Mr. Ted Rowlands: Rounding down.

Mr. Lloyd: I would say that rounding in either direction is unforgivable. We considered a significant manifestation of energy taxation policy, and it is that to which I shall direct the bulk of my remarks.
Before doing so, however, the House may find it useful if I summarise the essential findings of our report—the milk without the water. First, the procedure still imposes sustantial strains on my Committee, and I pay credit once again to its members and staff for the speed with which they worked. The time compression is simply too severe and it must be reconsidered.
Secondly, it became clear, despite strenuous denials to the contrary, that the de facto position was one in which the Government, paying BNOC's piper, were calling the tune. How could it be otherwise? BNOC, while it continues to buy at a regulated price and sell below that on the spot market, could be losing up to $1 million a day. We saw no easy escape from that dilemma while the current policy prevailed. Indeed, we said precisely that.
Thirdly, it was evident that, despite strenuous demands, whatever the mechanics of the consultation process may have been, the Government took the view that price stability meant stability at a price which was acceptable to them and to OPEC. Of course, that is and always has been the highest obtainable price for oil. The Government's interest is at its most manifest in the fiscal sphere, where they admitted that direct taxation on North sea oil would produce about £12 billion in 1985–86. They admitted further, but not without some pressure, that this was merely the first bite at an extremely succulent cherry, for by the time the oil is further refined, distributed, sold and, of course, taxed, in normal circumstances it would provide a further $45 a barrel, which would be divided roughly into $37.50 to the Government and $7.50 to the companies after their costs have been met.
I know from experience long ago that the concept of economic rent is puzzling not only to the vast majority of the public but to many economists and others. I recall an occasion when the late Sir Dennis Robertson—one of the three wise men appointed by Prime Minister Attlee — in his celebrated lectures on economic rent at Cambridge, drew on the board a temple similar to the Greek diagram Pi, and next to it a rather forlorn figure looking like Winnie the Pooh after a night out. He used to say, "This is what I mean when I say that rent may not enter into costs." It was a vivid illustration, but what we

know is that the economic rent concealed by this process is vast and that, from the nation's point of view, it certainly enters into costs.
The calculations are complicated by the detailed fiscal effects of oil trading, and as we are net exporters of oil —almost all of which is defined as landed for fiscal purposes — the total taxation produced by about 2·8 million barrels a day from the North sea cannot be far short of $37 billion, or about £34 billion per annum. That will continue substantially unchanged whatever happens to BNOC. The price of oil would have to fall a long way before that large figure was affected significantly.
Fourthly, the Committee concluded, and the Government admitted, that, despite the size of that sum—perhaps I should say that fiscal plum—the national interest of the United Kingdom must be determined by much broader criteria. That is certainly true of the OECD as a whole, for within the OECD only Norway and Britain are partial beneficiaries of the OPEC umbrella under which we shelter. The American domestic economy does not choose to shelter under a high energy cost system. The charts and figures—I wish I could display them to the House — in the massive document entitled, "Energy Prices and Taxes", published by the International Energy Agency, are both revealing and important. If we take the year 1980 as an index of crude oil import prices, expressed in national currencies as 100, by October last year—a mere four years later—the figure for western Europe was 160 and that for the United States had fallen to 85.
The result is seen most clearly in petrol prices and taxes. All have increased, but the United States and Canada remain by far the cheapest at about 30 US cents per litre, while Britain has slipped down the league table to 53 US cents per litre. Indeed, it is noteworthy that the tax on petroleum in the United Kingdom alone, and in most western European countries, is greater than the total cost of petrol in the United States and Canada.
It is no wonder that our economies are, by comparison, sluggish and unresponsive. We tax energy generally and oil in particular to the point where we create a major disincentive to economic development. The knock-on effects of this policy are not confined to oil. Oil sets the ceiling as the premier and most flexible fuel. Priced at its current level after tax, it enables other forms of energy to be sold at prices far above those which the market would otherwise determine and sustain. The result is that the entire energy base of western Europe, including ours, is distorted not only by the oil taxation mammoth that it must carry but by the artificial relationships between other forms of energy, such as coal and natural gas, and industrial costs generally.
That is a deeply entrenched policy, and its influence and scope will not disappear overnight with the transformation of BNOC. The Government's welcome abdication from the oil price market is, nevertheless, a step in the right direction. The Government have no more right to interfere with or influence the price of oil than they have to influence the price of tin, rubber, steel, coal or any form of energy. The transformation of the pattern and scale of energy supply in response—that response must be rapid and effective—to changing technologies, demand, costs of supply or changing conditions of any sort, is best achieved if rigidities are not inserted into the market mechanism either by the bureaucratic procedure of the cartel or by the bureaucratic procedure of the state. Inevitably, there is interference by both sectors, and that


distorts real costs, investment and demand, and it does all that in the interests of so-called stability, which, on close examination, merely proves to be a euphemism for high prices. The economy becomes sluggish and unresponsive, unemployment is higher than it need be, and the optimum distribution of energy supply between different systems and different markets is distorted, sometimes beyond all recognition.
That is often described in an even more exaggerated and tendentious euphemism as "an energy policy." It is nothing of the kind. Essentially, it is a policy to distort and often to inhibit development and change. To put it another way, it is the wolf of political opportunism and reaction parading thinly disguised in the sheep's clothing of a spurious economic rationality.
It is now clear that North America and Japan, which we properly watch carefully, are pursuing policies designed to achieve low real energy costs. That may not be a sufficient explanation of their undoubted economic growth and success over the past decade, but it is certainly a most vital condition of that success.
That is the iceberg beneath the Supplementary Estimates. It is large, significant and, above all, dangerous. We ignore it at our peril. Our industrial survival, especially in manufacturing industry, in a starkly competitive world, demands low, competitive real energy cost levels. In turn, that demands two things. The first is unfettered industrial efficiency in the energy industries — they must be enabled to respond quickly to the futures that they individually perceive—and the second is a healthy fiscal self-restraint on the part of Governments. They would be wise to let energy fructify within the system and let the economies of the West get up speed. If they do that, there will be a plethora of future fiscal opportunities for avaricious Chancellors. If they do not, they will have only themselves to blame, and no other policies will enable them to compensate, for the consequences. We have proved that throughout Western Europe.

Mr. James Wallace: We all welcome this debate. When it was announced that the debate would take place, it was thought that it would concentrate entirely on the Select Committee report, which has been unfairly described as having milk and water proposals. However, I am sure that hon. Members will take the opportunity to comment on and question the announcement made yesterday by the Minister of State, Department of Energy about the future of BNOC.
As the first hon. Member who is not a member of the Select Committee to speak in the debate, I thank the Committee, as no doubt the whole House will wish to do, for the speed with which it undertook its worthwhile work and the detailed evidence. The Committee has also reported speedily, thus enabling us to have the report when we debate this matter.
The report raises some highly pertinent questions about the operations of BNOC and Government policy, particularly in the two-month period since the last report on an almost identical Estimate, although with different sums. On that occasion a number of hon. Members said that there would be considerably more disquiet than that which they were expressing if, within a short time, the Government had to return to the House for sanction for further funds to subvert BNOC. Although the hon.
Member for Havant (Mr. Lloyd) made a spirited speech in which he made a number of pertinent points, the atmosphere of the debate, particularly on the Conservative Benches, might have been more hostile if the Minister had not made his statement yesterday.
No doubt hon. Members will take the opportunity to examine the merits of the abolition of BNOC, but this was done with great haste and I wonder why it was done now and not three months ago or at some time in the future. When he wound up the debate in December last year, the Minister said:
The Government's policy on oil prices has been stated more than once. It is to avoid destabilising moves in the short term. To the limited extent BNOC can influence events, its aim has been to promote stability." —[Official Report, 18 December 1984; Vol. 70, c. 232.]
Just before time cut him off, the Minister went on to emphasise that at that time there was a firming-up of oil prices, and he referred to the winter weather. With spring approaching, is this the most appropriate time, from the point of view of securing stability, to announce this measure? What is more, in the immediate aftermath of the miners' dispute, we all expect that the demand for oil will be decreasing.
If it is the Government's policy, as stated by the right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith), to ensure stability, at least in the short term, once BNOC has been abolished, it will be interesting to see whether stability will be better secured through the auspices of the agency. If there is a policy, we are entitled to ask whether we should now expect that same policy to be implemented without BNOC. Three months ago the Government were looking to BNOC to carry cut their policies. What method will they now propose to achieve that end?
At the time of the legislation that put BNOC into its present position, the then Secretary of State for Energy, now the Chancellor of the Exchequer, said that the trading corporation would exist for the specific purpose of security of national oil supplies: I noted in the statement yesterday that the Government consider that it is essential to retain powers which would enhance security of supply if that proves necessary. What mechanism do the Government propose to use in the absence of BNOC if there were a need to ensure security of supply by activating participation agreements or calling in royalties in kind?
Why was it necessary to wind up all BNOC's operation? If the Government think, with some justification in the light of the report and of the market in recent months, that BNOC was not maintaining a worthwhile role as a trading operation, why did they have to throw the baby out with the bath water? Would it not have been possible to maintain BNOC and redefine its terms of reference to undertake those matters which the Government will now give to a newly created body? Why do we have to go through the rigmarole of winding down one body and setting up another when a change in the terms of reference might have been a more appropriate way to go about it?
Yesterday's announcement could be used as a smokescreen to divert our attention from some of the other important points raised in the Select Committee's report. The hon. Member for Havant, who is Chairman of the Committee, has not allowed himself to be diverted by that. I look forward to the Minister's reply to his pertinent


questions. However, there are still fundamental issues on which we have not had a clear answer from the Government.
The first one, which has already been mentioned, is price. The Committee considers that matter in some detail at paragraphs 7 to 15, 21 and 22. In response to the hon. Member for Bedfordshire, North (Mr. Skeet) last June, the Secretary of State for Energy said that the Government's attitude to oil prices was that they would be determined by the law of the market. For some time the Government have sheltered behind the excuse that they are in no position to influence prices or long-term trends. I accept that many complex factors determine the price of oil, but in paragraph 21 the Select Committee concluded that the United Kingdom, as the world's fifth largest oil producer, was a substantial player in the oil market and, to some extent, a price maker rather than a passive price taker. Many of us share that view.
If the Government are able to influence prices, the debate should be about whether they should influence prices and, if so, to what extent. As the hon. Member for Havant said, we should consider how much taxation adds to prices. I agree with him that our industry deserves lower energy prices. We were all told about, and looked forward to, the great advantages of North sea oil. For all the benefit that our industry has gained, that asset could have belonged to any other nation. British industry has had to pay as much for oil as anyone else. Indeed, some of our competitors on the continent have obtained North sea oil more cheaply.
We have also had to bear some of the penalties of North sea oil. Now that the sterling exchange rate against the dollar is so low, we tend to forget the years when sterling was high because we were a petrocurrency. That caused problems for British industry in terms of international competitiveness. A reduction in taxation—which is not a subsidy—would benefit British industry.
Pricing oil highly brings revenue to the Exchequer, but the Select Committee concluded that lower prices would assist our manufacturing industry and, to some extent, help to create jobs. This is not an issue on which the Government can afford to be neutral. They cannot say that it is a matter for the law of the market. The price of oil has important consequences for many aspects of our economic life and we should welcome the Government coming clean and telling us what they believe oil pricing policy should be.
We are also unclear about the Government's policy on the level of oil production and, indeed, whether there is one. The prospect of benefits from North sea oil coincided with the Yom Kippur war of 1973. We looked forward to being self-sufficient. We are now producing more than 120 million tonnes annually and are probably 30 per cent. above self-sufficiency. The decision to go to that level of production was taken without any debate in the House, and perhaps without any debate in the Government. The management of oil is so important to our economic wellbeing that there should have been a much more open and constructive debate on whether that policy was in the nation's best interests.
There has been no discussion of the consequences of restraining production on the exchange rate or the balance of payments. There is a feeling that the Government have quietly allowed themselves to be committed to a policy of

maximum production, for Exchequer ends. As the Select Committee said, although the PSBR is important, it should not dominate Government thinking on oil pricing. Nor should it dominate their thinking on the level of production. People are increasingly questioning whether we should impose limits on production to extend the life of North sea oil. The time has come for that debate.
It is regrettable that the only genuine chances that we have had to debate this important subject recently have been the two Supplementary Estimates debates, lasting three hours each. No doubt we shall have another opportunity in debates on legislation concerning BNOC, but I do not believe that they will enable us to debate the wider issues. I challenge the Government to present a White Paper on their oil management policy on pricing and depletion so that the House, industry and the country can have a proper opportunity to discuss how we manage the nation's most important asset.

Mr. Michael Portillo: Like the hon. Member for Orkney and Shetland (Mr. Wallace), I congratulate the Select Committee and my hon. Friend the Member for Havant (Mr. Lloyd), who presented his case clearly today, on a capable report. With the announcement yesterday of the abolition of the British National Oil Corporation, we shall never quite know whether the Government jumped or whether they felt the push of the Select Committee in the small of their back.
I have taken a close interest in BNOC for a long time, and I recall that when the Conservative's came to power in 1979 two arguments for retaining BNOC were put forward. The first was that the Government needed an insider in the oil industry because oil production was new to Britain and, it was argued, the complexities of the industry were such that the Government could not understand the industry without being a player on the field. I always distrusted that argument. The complexities of the oil industry are not so much greater than any other as to require the Government to be involved in it. The second argument had more merit. It was that BNOC might play a role in protecting our security of supply. That is an important matter, but the more I considered the proposition, the more I concluded that the participation agreements of BNOC could not achieve that security of supply.
The participation agreements are simply not flexible enough. BNOC is committed to buy or sell oil many months in advance, but a supply crisis in oil can arise in a few days. Moreover, the participation agreements cover about half of the nation's oil, and yet it is possible to have a shortfall of about 5 per cent. and for that to constitute a major problem. Furthermore, the participation agreements cover only crude oil, and the substance that we need to power our cars and factories is not crude oil but the products of oil. BNOC never had control over the supply and movement of products of oil.
Fortunately, as the security of supply is so important, the Government have adequate powers to take any steps that they need to take in an emergency under the Energy Act 1976. BNOC never added greatly to the Government's powers. Indeed, its existence made Britain more prone to oil disruption, because we came to rely on it to take care of us during supply crises. During the problem of the summer of 1979, when there was a world-wide shortage of oil products, especially petrol, and when my right hon.
Friend the Member for Guildford (Mr. Howell) was Secretary of State for Energy, the Government relied on BNOC to keep things ticking over smoothly. For the reasons that I have just given, BNOC was not able to achieve that, and I suspect that the Governments of France and Germany took more direct action to ensure that their oil companies kept them supplied. Although other European countries had no BNOC and no oil of their own, there were fewer petrol queues on the continent, and it was oil-rich Britain which seemed to bear the brunt of the problems.
As soon as that security of supply argument lapsed and was discredited, another argument arose in its place. It was that it would be difficult for the Inland Revenue to levy taxes on oil unless there were a reference price clearly established by BNOC. I never believed that argument, either. It seemed to me that other countries, such as the United States of America, had no need of a national oil corporation and were still able to levy taxes on their oil companies satisfactorily. It seems that that argument has now fallen from sight.
I do not intend my following remark as in any way an aspersion on the staff of BNOC, who have performed their duties with great dedication and distinction. However, BNOC was not only an unnecessary invention but was rather harmful in its effects on this country. It was trading about half the oil being produced in this country. Therefore, it was the price setter for North sea oil. At the same time, it was state-owned. We cannot altogether blame foreign Governments who were confused by that. I accept the assurances given by Ministers that the Government did not set the price of North sea oil, but where a state-owned company is also the oil price setter it is unreasonable to expect foreign Governments to understand that fully. The subtleties of the relationship between the Government and BNOC are sometimes puzzling enough to people in this country, and clearly they can be perplexing to people in other oil-producing states.
In fairness to BNOC, one must say that it was put in an impossible position. If its prices reflected market conditions, it would be accused of forcing the pace—either forcing prices upwards when the market was moving in that direction, or being the leader in bringing prices down. If, on the other hand, BNOC held back and lagged behind the market, it was liable to run up the losses on which the Select Committee has just so ably reported.
Therefore, Britain was also put in a difficult position. It seemed that we were being invited either to join in an international price-fixing cartel or to hold back from joining in that cartel and risk incurring the wrath of other oil-producing countries if we did so. We were being drawn into either collusion or collision with OPEC. It is interesting to note that much more important oil producers than ourselves, such as the United States, were never so embarrassed, because they never had a national oil corporation to put them in such a position.
Therefore, I am sincere in extending congratulations to my right hon. Friend the Minister of State on the courageous decision that he announced to the House yesterday. It is a courageous decision, and the right one, too. I hope that he will not mind if I say that I have three reservations about his decision. The first is that in his statement yesterday he seemed to lay great emphasis on the recent change in oil trading conditions. The reason why that concerns me is that there were deeper flaws in BNOC. which go back much further than the past few

weeks or months. The reason why I stress that is that if the trading conditions change again, as well they may, I hope that there will not be a clamour, to which the Government might accede, for the BNOC, in its old form, to be reinvented.
My second reservation or disappointment is that the Government will continue to take royalty in the form of oil. I understand the oil taxation reasons for that, but it means that the agency that replaces the BNOC will still trade about 250,000 barrels a day. Is my right hon. Friend sure that in those circumstances the agency will not: still be regarded as the market maker in the oil industry, with all the problems that can flow from that?
Thirdly, I should like to ask my right hon. Friend why he feels that he needs to retain the participation agreements at all. My own strong feeling is that he will never reactivate them. If one day we find ourselves in a supply difficulty, I am sure that he will wish to use much more direct means to ensure security of supply in this country, and will not have the time or leisure to reactivate the rusty mechanism of the participation agreements.
Finally, I congratulate my right hon. Friend on his sense of timing. I should have thought that almost any time during the past six years would have been an easier time to abolish BNOC than the day on which he chose to announce it—yesterday—with the pound low against the dollar, with oil markets weak and just a few days before the Budget. That reassured me that the Government retain a highly developed sense of theatre.

Mr. David Howell: I join other hon. Members in congratulating my hon. Friend the Member for Havant (Mr. Lloyd) on his chairmanship of the Select Committee that produced the report on BNOC as well as on his robust call for a strategy of lower energy prices on a market basis, for which I believe world conditions now allow. I hope that we shall hear more support from hon. Members for the development of such a strategy. We have left the unpleasant era of constant upward pressures on all energy and fuel prices. A positive policy should now be developed for lower prices of all fuels. That is possible, and I look to my right hon. Friends in the Government to develop such a policy as from now.
My hon. Friend the Member for Havant said that he hoped that this would not be a yahboo debate. The "yah" may be here but the "boo" is not. There is not one Back-Bench Labour Member here. The only person from the Labour party who is here is the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), who is on the Front Bench, to join us in saying goodbye to BNOC. Perhaps that will enable us to have a better discussion. Certainly we have heard some interesting contributions, including the excellent words of my hon. Friend the Member for Enfield, Southgate (Mr. Portillo), who some years ago was an invaluable assistant to me in the Department of Energy.
I cannot remember the name of the hon. Member who, at the time of the resignation of Dr. Dalton as Chancellor of the Exchequer, shouted out, "They shot our fox." However, the phrase came to mind yesterday when I heard my right hon. Friend the Minister of State announce that BNOC, which, I am afraid, has come in for a good deal of criticism, has got into considerable difficulties and is beginning to cost the taxpayer awkward amounts of money, was to be no more. As I said yesterday, it is a right decision, that what is BNOC today—it is a different


body from the BNOC of the early 1980s and the late 1970s —should be brought to an end. My only query is why we are doing it so late in the day.
My view was that the trading arm of the old BNOC should be kept on for an experimental period to see whether we needed a body in Government that could influence oil movements, and until we were sure that there were fundamental changes in world oil market conditions. That became apparent a long time ago. The case for ridding ourselves of an organisation that shaped official prices and made us vulnerable to foreign criticism and foreign pressures was a strong case a good while ago—at least a year ago. The delay in introducing the new policy has been a matter for regret. It has been costly and has meant that the taxpayer has had to bring forward valuable and scarce funds. It has not done us any good diplomatically either as it has created a great deal of acrimony and difficulty with other nations — obviously those within OPEC.
It is not the replacement of BNOC by the new agency which my right hon. Friend the Minister of State mentioned yesterday which is the most important matter. I do not have strong feelings on whether we should have a new agency of the sort that was described. I suspect that such a body may be useful if we have another sudden violent interruption in world oil supplies and have to influence movements in oil at an early date before we can even take steps under the Energy Act. It may be useful, but I do not believe that that is the most important part of what the new announcement implies.
I should also like to echo the words of my hon. Friend the Member for Southgate who referred to the staff of BNOC. They have worked with great skill under very difficult conditions, but gradually they have found themselves fulfilling a role which was never designed for them. Not merely were they shapers of the entire price structure of North sea oil but finally they were the instrument, apparently, of official wishes to keep in line with the surface activities of the OPEC cartel on pricing. When the BNOC trading arm was originally left in place, it was not intended that it should be involved in shaping prices. It certainly was not intended that it should be used as an instrument for supporting the OPEC cartel. The intention was that its role should be to influence major oil movements, both imports and exports, if and when another crisis occurred.
Even at that role it had not, frankly, been very good. As my hon. Friend the Member for Southgate reminded us, in the summer of 1979 the Conservative Government inherited an organisation which had, unfortunately, been committed, in a previous period when there had not been a crisis to substantial oil exports. Therefore, the managing of oil markets in the summer of 1979 was made very much more difficult for the Government.
If I may correct my hon. Friend the Member for Southgate, the Government did not rely on BNOC to see things through smoothly. It could not do that. BNOC was too committed elsewhere. That created severe difficulties and brought home the need for an organisation that was different from the BNOC which we had inherited. Therefore, the real gain resulting from the announcement made by my right hon. Friend the Minister will be not so much a change in the institution but the end of price intervention and the end of the attempt to run an official

price mechanism for North sea oil. I hope that we shall be assured that this will happen. I have strong views about this. In an era of soft oil prices, which has been the normal state of the oil market since oil was first discovered, with the single exception of the past 13 or 14 years, the kind of intervention that appears to have been practised over North sea crude has, far from stabilising the market, destabilised it.
I should like to know whether the Minister and other hon. Members agree with the assessment that has appeared several times in the excellent journal Petroleum Intelligence Weekly. In its issue of 14 January it said:
Far from upsetting fragile world markets, the abolition of a BNOC sales price, or slashing it to spot market levels, might reduce the volume of potentially de-stabilizing spot trading in North Sea crudes. Aligning BNOC with spot market prices could largely eliminate the incentive for integrated producers to sell their availabilities on the spot market … and replace with supplies bought from others on a spot basis.
That is an expert and shrewd inside view of what was happening in the oil market as a result of BNOC continuing to pay an artificially inflated price for its participation. The effect was to drive more and more people on to the spot market in order to establish a lower reference price, which led to the destabilising of oil markets.
Because of this and many other decisions that have been taken by OPEC, it greatly saddens me that during the last year there has been prolonged agony while oil prices worldwide have been adjusted to more normal levels. International crude oil prices have not yet settled down to the level at which I believe they will settle, but that pattern could have been achieved much earlier, which in turn would have helped the pound to settle a good deal earlier if we had not intervened and if there had not been the destabilising consequences of that intervention. I believe that it was a very great mistake. It has prolonged our difficulties and has led to the the commitment of public funds not, by the standards of the overall budget, on a huge basis but nevertheless on a significant basis — funds which are desperately needed in many other areas.
Furthermore, the policy of maintaining an artificial price made the United Kingdom a scapegoat and a point at which OPEC pressure could be applied. As my hon. Friend the Member for Southgate said, without the BNOC official price we should not have been subjected to these considerable pressures. In the United States of America, which produces three or four times more oil than this country, there is no American national oil corporation. Therefore, it is not forced into this embarrassing position.
The losses that we are discussing, for which the taxpayer will have to pay, could, I believe, have been avoided. We are considering a tale of error. That tale of error has now been redeemed by this belated decision of the Government to dismantle the oil price structure and do away with the residual BNOC which was the instrument of that price structure. However, I do not believe that such a position should have been allowed to continue for as long as this. It is regrettable that we should have to authorise the use of taxpayers' money to make good the deficiencies. This should not have been allowed to happen. Nevertheless, I am glad that my hon. Friend has now made a decision that will prevent this country from getting into such a very difficult and unwelcome position in future.

Dr. Michael Clark: I welcomed yesterday's statement by my right hon. Friend the Minister of State, Department of Energy and I should like to support the comments that have been made by my hon. Friends. As a Government agency, the British National Oil Corporation tried to maintain oil prices, but it tried to do so without many tools at its disposal. It had no storage facilities. It was faced with the difficulty that output from the North sea was inflexible. Furthermore, it did not sell oil forward.
I believe that oil prices should be lower. The British economy would benefit from lower oil prices. Therefore, I welcome the departure of BNOC. However, I understand the need of the Chancellor of the Exchequer for the revenue from North sea oil. Furthermore, the oil companies need a proper return both to pay for their past investment and to allow them to continue with present and future exploration.
On 6 December 1984 I had the opportunity to ask the chief executive of the British National Oil Corporation this question during a hearing by the Select Committee on Energy:
is it not true to say that this Government has a policy of free enterprise and market forces and therefore would you not agree that these aims can best be served by not having a BNOC organisation?
The reply of the chief executive was:
Your question should be directed to the Government and not to us.
The Government have now answered that question, even though they did not answer it during the further evidence that was taken at later sessions. However, witnesses appeared before the Select Committee who defended the existence of BNOC, notably my right hon. Friend the Minister of State, and also witnesses from the Treasury and BNOC. Therefore, I was very surprised yesterday when I heard the statement, because some of the arguments advanced for the retention of BNOC seemed to be convincing. At least I thought that those witnesses who gave evidence to the Select Committee had convinced themselves that the organisation should remain in being.
May I look briefly at some of BNOC's objectives and examine to what extent they have been met during the last few years. First, although not necessarily in order of importance, BNOC seeks to trade profitably. During its last full trading period its turnover was £ 7 billion and it made a profit of £500,000. The return on turnover was 0·007 per cent. — hardly a licence to kill. During the last six months when BNOC was buying at term price and selling more than 75 per cent. of its oil at the spot price it made a loss of £65 million. In fairness, if the aim of the corporation was to keep up the price of oil, which it will not admit was its aim, perhaps it should take some credit for doing so, because the Treasury evidence was that if the dollar price of oil fell by about 1 per cent. it would cost the Exchequer £150 million a year, and that the oil price might fall by 6 or 7 per cent. with the demise of the BNOC. Therefore, £65 million in half a year, or £130 million in a full year, is a small price to pay for keeping oil prices up and maintaining the price. But since the corporation will not claim that its role is price maintenance, it is difficult to give it credit for having achieved that. It claims that it should sell at a profit, and in that it has clearly failed.
The second objective is to provide maximum benefit to the United Kingdom economy. Many of my hon Friends would agree that the United Kingdom economy can benefit best by having cheaper oil. High raw material and fuel costs adversely affect companies' trading positions. If the price is too high, companies can be driven out of business and they will stop trading. It is far better to have lower raw material and fuel costs and to retain companies in business, allowing them to export and to employ people in Britain. If the Exchequer wants revenue, as my hon. Friend the Member for Havant (Mr. Lloyd) said, there are other ways of getting it. We can tax the profits that companies make rather than price them out of business by high prices.
The manufacturing sector of our economy has suffered greatly over the past 10 years, and perhaps longer, as a result of high fuel costs. Over the past 20 years manufacturing industry has lost 3 million jobs and its contribution to the gross domestic product has fallen to 25 per cent. Lower oil costs for the manufacturing sector would make it healthier. I hope that even at this late hour the lower oil prices that will follow from the abolition of the corporation will be an encouragement to Britain's manufacturing sector.
The chemical industry has done moderately well over the past few years and that would also benefit from lower oil prices. It will have greater opportunity to compete, export and expand.
But we must remember that even if the price of oil should fall from now on, with the present exchange rate there will be quite a windfall in sterling terms. I hope that the Chancellor will take advantage of that next week when he is setting our Budget. However, I doubt whether the existence of BNOC helps the United Kingdom economy in many ways. In that respect, it is perhaps as well that it is going.
The third objective of the corporation is security of United Kingdom oil supplies—a point dealt with by my hon. Friend the Member for Enfield, Southgate (Mr. Fortino). It is vital that we have secure supplies in Britain and that we have the participation agreements that give the corporation the opportunity to exercise its right to buy 51 per cent. of the output of North sea oil. But those agreements will remain even when the corporation has gone. The security of supply that the corporation was able to give was not a physical security of supply; it was one based on the legislation of the participation agreements. That legislation will still exist when the corporation has gone. There is no need to have the corporation just to have security of the supply of oil in Britain, as my hon. Friend the Member for Southgate said.
We are left with only two objectives that will have to be achieved by the new agency that takes over from the corporation. The first is the sale of oil—oil provided in kind for royalties. That will continue to come from those fields that went on stream before April 1982, but it will dwindle and ultimately the agency replacing the corporation will not have that responsibility.
Secondly — the fifth and final objective of the corporation — there is the management of the Government pipeline system. That is a proper duty for a Government agency. Therefore, I am pleased that the new agency will take on that role.
BNOC has had to operate between a free oil market and OPEC. The corporation has tried to influence prices but has set term prices for shorter periods than were directly


related to market values. The fact that the corporation has made a loss proves that it cannot determine prices, nor can it achieve their stability. In practice, OPEC sets the prices by varying output in a way that the corporation cannot, due to the inflexibility of North sea production.
At the same time that OPEC has been setting prices it has been blaming BNOC for either undercutting prices or overproducing. It seemed that whatever the BNOC did it was subject to criticism from OPEC. The free market has now come into being in the North sea and that is a good thing. It is a good thing that the corporation is going, and I congratulate my right hon. Friend and the Government on their brave decision yesterday.
It is important that North sea oil should be free from price fixing or price maintenance, whatever we wish to call it. I wish the new agency well, but in doing so I hope that it will not be called the Oil and Pipeline Executive Committee because its initials will lead to a lot of confusion.

Mr. Peter Rost: I pay tribute to my hon. Friend the Member for Havant (Mr. Lloyd) for his distinguished leadership of the Select Committee on Energy. I am enjoying the opportunity which seems to come rather too rarely these days to the Back Benches of being able wholeheartedly to congratulate the Government on a measure which appears to meet with unanimous and enthusiastic support from the Conservative Benches.
The decision of my right hon. Friend the Minister of State is surprising, paticularly because it is such a prompt response to the Select Committee's report. We hope that it will establish a precedent. We welcome the response, particularly bearing in mind that the Select Committee did not even recommend the abolition of BNOC, although one or two of us would have liked to do so. We felt that it was not necessary to recommend its abolition. Simply by trying to establish its role in an impartial way, and emphasising what we discovered, seemed to speak for itself.
It was apparent from our inquiry that the corporation no longer had a role which was worth keeping. We have performed a function which Select Committees should try to perform more often. Rather than trying to draw dogmatic conclusions or make powerful recommendations, they should simply emphasise and draw attention to the facts in as impartial and informed a way as possible. That should produce in a responsive Government the right sort of response. That is what appears to have happened here. There has been the realistic recognition that what was after all a relic of Socialist bureaucracy no longer has a role, even if it had a role in days gone by.
In saying that, I, too, wish to emphasise that there is no criticism of the BNOC management. I, like my colleagues, have had many opportunities of meeting them. One almost felt sorry for their impossible role. They were expected to operate in a straitjacket of statutory and political knots. It was unfair that people with tremendous expertise and ability should have been without a role in which to develop their talents. However, I have no doubt that each and every one of them will find new opportunities in their specialist field of oil and energy. I wish them every success.
There can be no doubt that BNOC was originally given a role to protect this country's security of supply. One can perhaps understand the Labour Government's reasons for trying to do that. Circumstances were then quite different in the energy market. However, it became increasingly clear that there was no need for BNOC if that was its only function, as security of supply was adequately protected by other legislation. The Government have sufficient powers to protect security of supply should that ever prove necessary.
Once that role had become obsolete, there was very little left for BNOC to do until it was suddenly discovered that the oil price was weakening, that there was a glut rather than a shortage, and that Britain was a major producer and thus under some moral obligation to help OPEC support the artificial price. Therefore, BNOC was given a new role in life—to attempt to hold up the price of oil, together with other producers. One can understand the Government's thinking, even if one does not quite follow their logic. That was the role that BNOC was given, even if it was never openly admitted.
During this inquiry and the previous inquiry the Select Committee could not find any evidence to show that BNOC had any influence over the price of oil. We tried hard to probe and to find evidence that BNOC influenced the price of oil in world markets. On the contrary, it became clear, at least to me, that, far from helping to prop up the price of oil in recent months, BNOC had contributed to its weakness.
I maintain that in the role that it had to play BNOC had a destabilising effect on the price of oil. Indeed, I very much agree with the theme developed by my right hon. Friend the Member for Guildford (Mr. Howell). We would probably all agree that oil companies, with decades of experience, are far better at marketing oil than BNOC could ever be, not only because of their experience, but because they have the marketing resources that are needed. They have the financial resources and the storage facilities to store rather than sell immediately. They also have the downstream marketing pipelines which can absorb, at least in the short term, a temporary embarrassment of surplus oil.
On the other hand, BNOC was placed in the ludicrous position of having to buy the oil at a fixed price and sell it almost simultaneously on the spot market in Rotterdam, regardless of the price or of how weak or strong the market. Therefore, BNOC was a major factor in contributing to the short-term collapse of the spot price in Rotterdam and to the widening differential between that and the fixed OPEC price.
The weakness in the oil market in the past few months has been entirely due to that differential. The spot price went down, and that had a destabilising impact on the whole pricing structure. The forced sales of BNOC on that spot market largely contributed to that collapse. If BNOC had not had such a large quantity of oil to sell, and if, instead, the oil companies had been left to market their own, there would still have been sales on the spot market, but they might have been managed more discreetly. They might even have held off, if only for days, and tried to judge sales so that they met demand more effectively. But of course that did not happen.
The Government have recognised that in a realistic and sensible way. I congratulate my right hon. Friend the Minister on having taken a courageous and prompt decision to abolish BNOC. It is no longer required in order


to maintain security of supply, and its role in helping to maintain the price of oil was never proved and could have been counter-productive. I hope that BNOC's successor will be able to perform the role that it is given more effectively, and that the marketing of oil in a free competitive market will produce a more stable market. Only time will tell whether we are right, but the Government's courageous decision will no doubt be fully justified.

Mr. Rob Hayward: The nature of this debate has been changed somewhat because of the announcement made to the House yesterday afternoon. Had the statement not been made yesterday, there was a danger that the members, of the Select Committee would have told my right hon. Friend the Minister that his evidence to the Select Committee both before and after Christmas reminded them of the Shakespearean comment:
The Lady doth protest too much, methinks.
We were not really convinced that there was a genuine case for the Government to intervene, nor for BNOC and the Government to intervene. Indeed, I am also reminded of that same Shakespearean comment when I look at the Labour Benches. Yesterday the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said:
We shall oppose this legislation tooth and nail." —[Official Report, 13 March 1985; Vol. 75, c. 306.]
I believe that that phrase was also used in another place. May I ask whether the hon. Member for Merthyr Tydfil and Rhymney is the tooth or the nail?
During the debate, several hon. Members have paid tribute to the services of BNOC. Again, I am reminded of a quotation which is perhaps appropriate. It comes from Tacitus, and I hope that is summarises the feelings of hon. Members. Tacitus said:
You were indeed fortunate … not only in the distinction of your life but also in the lucky timing of your death." The timing of BNOC's death may also have benefited my right hon. Friend the Minister.
Yesterday, Opposition Members expressed anguish and surprise at the announcement, but I think that that was due to the fact that in the past 12 months we have been distracted by the coal industry dispute. Consequently, we have failed to address ourselves to the changing nature of other energy resources available to the United Kingdom as well as to other parts of the world. Whereas a Minister could reasonably, some 12 months ago, have argued that there was an acceptable role for BNOC, the circumstances have changed markedly. The change has lasted over a protracted period. That justifies reviewing the circumstances in which BNOC is operating.
I am surprised that we have heard so few quotations from the report of the Energy Committee. I should like to draw the attention of hon. Members to some comments in the report. These comments were made prior to yesterday's statement. In paragraph 22 it says in bold type: "it is clear to the Committee that stability currently is a euphemism for action to impede a fall in the price of oil and that the distinction between 'stabilisation' and 'shoring-up' is merely semantic".
Later it says:
The Committee recommends that the Government come to the House prepared to define stability and to answer the fundamental—and non-hypothetical—question of for how long they are prepared to try to achieve short-term stability while oil prices are falling when it has not even been proved convincingly"—

here I refer to the comments of my hon. Friend the Member for Erewash (Mr. Rost)—
that BNOC is an effective mechanism for achieving this purpose. The House cannot be asked to continue to vote Supplementary Estimates which have provided substantial tranches of public money in an attempt to achieve stability, or, in our view, to impede the fall in the price of oil, unless the Government makes clear what its policy is and provides more convincing evidence that it has achieved a measure of success.
Inherent in those statements are the contradictions which the committee identified in the operation of BNOC in its relationship with the Department of Energy. The Committee was making the point that the contradictions could not and should not continue. There had to be an alternative solution open to the House.
As my hon. Friend the Member for Erewash said, the Committee did not put forward specific recommendations. Some members of the Committee asked several of the witnesses whether BNOC as it stood, in the light of the state of the oil market, had a realistic future. I share the view of my hon. Friend the Member for Enfield, Southgate (Mr. Portillo), who said that as the Government had announced their intention to abolish BNOC we should not in a rash moment return to that organisation because it would seem appropriate for a short time. We should continue to have the courage of our convictions, as announced yesterday, that it is worthwhile operating continuously without BNOC.
The conclusions of the Committee in relation to BNOC as a potential agent were highlighted in a series of paragraphs beginning with para. 23, which says:
In the light of all the evidence the Committee feel that so far as the setting of the official price is concerned the Government has been playing the key role and that it should openly acknowledge doing so.
Paragraph 26 says that the Committee
is not convinced that as presently constituted and as it currently operates BNOC can perform this role.
More crucially, in paragraph 28 it says:
Under a more flexible, market-related approach to pricing … the chances of losses being incurred are greatly reduced." It was those losses which we were originally to debate this afternoon, because the Committee felt that it was not acceptable that in Supplementary Estimate after Supplementary Estimate the House should be asked to approve the expenditure of £45 million, £20 million or whatever, without a clear statement of the policy that the Government were pursuing.
That is summarised in paragraph 29, where the Committee says:
Only if clearly defined national issues are at stake should taxpayers' funds be employed for this purpose.
That goes back to the comments of my hon. Friend the Member for Southgate that it is necessary to act in such a way only when there is a national emergency. Participation agreements will not provide a satisfactory option in those circumstances. We will have to operate in the oil market as we do in other markets such as defence procurement, where we call on national suppliers to cope with national and international emergencies. There is no point in asking for participation agreements to be effective in a few months or a few weeks. We go to defence suppliers for immediate supplies of whatever equipment they are able to provide in a national emergency. There is no reason to believe that we cannot do the same with the oil companies.
In fact, the Committee commented at the beginning of paragraph 29:


The risks of short-term fluctuations in the oil market are risks which should generally be borne by the oil companies and not by taxpayers.
We were of the view throughout the taking of evidence that it was not a justifiable reason in current circumstances for not putting the burden of fluctuations in the oil market on to the oil companies, since they seemed to cope effectively with other aspects of the industry.
We heard yesterday during questions, some of which I could reasonably describe as vitriolic, from Opposition Members now absent that the abolition of BNOC would be a disaster, that the pound would slump and that spot oil prices would go up and down like a yo-yo and would go out of control. What has happened in the last 24 hours? The pound has been virtually static. If anything, oil prices have risen marginally, despite the announcement of the proposal that BNOC should be abolished. If there were to be a problem, one would have expected that in the first hours of uncertainty after the announcement there would have been great fluctuations. If the fluctuations that have taken place are the worst that we shall have to face, I am more than satisfied with yesterday's announcement of the intention to abolish BNOC.
I accept the request that has been put to the House for the granting of the Supplementary Estimate. I believe that it will be the last one that will be put while we are Members of this Parliament. I hope that the changes announced by the Minister of State yesterday will reflect the changing circumstances of the last few months and years and that we shall see a sensible operation on the spot oil market, borne by the oil companies and not by the Government.

Mr. Ted Rowlands: The temptation to break into the cosy unanimity is too great to resist. There was a reference to tooth-and-nail opposition by the hon. Member for Kingswood (Mr. Hayward). I hope that he will persuade his Whips to include him in the Committee which will consider the necessary legislation so that we can demonstrate how it will be fought tooth and nail. I assure him that we shall fight it in the most vigorous way imaginable under the procedures available to us.
I should like to pay a compliment to the Chairman of the Energy Committee and his team for the report, although I have found the comments today of hon. Gentlemen who were members of the Committee rather strange. With respect to the Chairman and to the members of the Committee, the evidence in the report does not lead one to the conclusion that the British National Oil Corporation should be abolished. Not only does the evidence not come to that conclusion, but almost all the witnesses who were called before the Committee did not produce evidence to that effect. Let us go through them.
The Committee first called a distinguished academic from Oxford, Mr. Mabro. I have read his evidence. What did he recommend to the Committee? He recommended that Britain should have an integrated national oil corporation with upstream activities, and with production and exploration responsibilities as well as the role of a state trader. I think I am right in saying that. I do not think the Chairman could deny that that was the evidence that Mr. Mabro gave to the Committee.
None of the Treasury witnesses—Mr. Cassell, the deputy secretary, or the assistant secretary—gave any indication that BNOC should be abolished. I have read their evidence avidly; I have read it word for word. I do not think that one could draw such a conclusion from their evidence.
Of course, the star witness was the Minister of State himself. He may say that it was his guise to keep a straight face and not let on to the Committee that what he was up to was the abolition of BNOC. I have always believed him to be an honourable and open man in most respects. Not only did I read the Minister's evidence, but I listened to him giving it and to his cross-examination. I challenge the House to quote a single word of his which gave any serious sign that the Government believed that there was a case for the abolition of BNOC.
Written evidence was given by the oil companies. Britoil ummed and aahed in a weasly way. Shell said neither one thing nor the other. The small oil companies — Westar, for example — submitted a eulogy full of glowing praise for BNOC. Little evidence was given to the Committee to justify the decision announced yesterday.
We must remember the Minister's remarkable speech on 18 December. The market has not changed dramatically since then. The problems faced by BNOC at the end of December were not that different from the problems that it was experiencing in January and February. The best testimony of the role, purpose and important functions of BNOC was the Minister's speech to the House on 18 December. In three months that position has not altered fundamentally. The Minister then allayed my fears that he might have been up to no good and that he might announce the abolition of the corporation within three months.

Mr. Hayward: Does the hon. Member accept that when evidence was taken in November and December the oil market had changed dramatically since the summer? The Committee debated whether the actions that were taken were justified in view of the timescale. It is three months since that debate, and we can now see a direct pattern which is more consistent than it appeared in December.

Mr. Rowlands: That is just possible. In January and February prices were firming up and creating less of a problem. The OPEC deal was also made. The Minister's case to the House on 18 December was that BNOC's important function did not depend on the market at any one time. His statement was one of broad support for BNOC's basic role and function. Why has he suddenly taken this decision?
Some aspects of yesterday's statement were spurious and they have been referred to by Government Members. The argument has gone something like this: Because BNOC failed to stabilise the price of oil and the markets were not likely to change in the near future, BNOC has to be abolished.
The argument is that BNOC failed to stabilise the price of oil. BNOC's job was never to fix prices. When we debated the Petroleum and Submarine Pipelines Act 1975 and the Oil and Gas (Enterprise) Act 1982 and discussed the section under which money is transferred to BNOC, not one comment was made by the then Secretary of State to suggest that BNOC should be in the game of price fixing or trying to top up prices, as it has done particularly in the last six months — twice last summer and again in


January and February this year. BNOC is condemned and is to be abolished for failing to achieve something that it was never set up to achieve. That is one of the spurious reasons given in yesterday's statement.

Mr. Rost: Is not the hon. Member being a little naive by suggesting that the Government did not want BNOC to play that role, although I agree that it might have been embarrassing to admit that publicly?

Mr. Rowlands: That might have been its role in the last few months, but it was never a declared function. I shall deal later with what BNOC got up to and why. On behalf of BNOC's professional staff and in general terms I have a right to say that that is a spurious reason for abolishing it. I hope that the Minister can give us a more detailed reasoning.
One of the arguments is that the markets are unlikely to change in the near future. Apparently the corporation is to be abolished, but not because the Minister believes the present market trend to be permanent. He is too cautious and coy to put on record that the glut and lower oil prices will continue for long. It is to be abolished because the markets are not likely to change in the near future. The corporation is to be abolished because of a possible temporary movement in the markets. That is a spurious case.
Much resentment is felt about certain aspects of the presentation of the decision. Some comments by hon. Members and the press gave the impression that we were dealing with yet another lame duck state-owned corporation which was losing money because of its own inefficiency and failings and that we had to abolish it so that it did not lose any more money. The Minister did not try to correct that impression.
We should ask ourselves exactly what happened and why BNOC lost money. Until last summer BNOC had not lost any money. It had conducted a remarkable exercise in buying and selling large volumes of oil. Its turnover was enormous and it managed to make a modest profit.
The first loss was in the last quarter of last year. It also lost money in the first two months of this year. From the way in which the case was presented yesterday the inference is that this was the responsibility of BNOC. I challenge the Minister directly. Many times yesterday Government Members said that they were glad that BNOC was to be closed because it was losing money and had engaged in the fixing of oil prices when we want lower prices. Let us put the blame where it lies. The Energy Committee tries to do that in its report.
BNOC started losing money suddenly after trading successfully since the Oil and Gas (Enterprise) Act was passed because the Government last summer and autumn, and in January and February, chose to intervene in the market to hold up the price.
We went over this ground before Christmas and I listened to the Minister's evidence. I suspect that in the autumn of last year there was an inclination on the part of both BNOC and the Government to try to create a pause in the market—that was the phrase used in the evidence given to the Committee.
What was BNOC's advice to the Government in January and February? I ask the Minister this in the light of the draconian action which has now been taken in abolishing BNOC and because it has been blamed for losing money. After the problems in the last quarter of last

year, what did Mr. Goskirk and his team advise the Government to do about oil prices? What was BNOC's judgment in this regard? Is it not a fact that, generally speaking, BNOC wanted to move towards a market-related price to avoid incurring a further loss of the kind it had incurred in the previous year? Will the Minister tell us in his reply what BNOC's judgment and inclination were in handling the problems of the first two months of this year and what part of it was a decision by Government?
I do not know whether it was a slip of the tongue because the Minister of State was weary, but I nearly fell off my chair when, in the course of cross-examination by the Committee, he said that the Government fixed the price after consultation with the corporation. I think that that was pretty close to the truth in January and February. Therefore, why should BNOC take the rap for decisions that were taken basically by the Government?
It is not difficult to see why the Government decided that BNOC should lose money in January and February. It was not Mr. Goskirk or the corporation that spilled the beans on this matter to the Committee. It was the Treasury deputy secretary, Mr. Cassell. We have been invited to read the report, and I have done so. The deputy secretary said on 28 February in evidence to the Committee—this is on page 37 and is in answer to question 120:
…OPEC have reached some sort of agreement on price, nobody can tell whether it will stick, or I do not think anybody can tell whether it will stick in the long run, but at least we are in a position where it would be rather rash of us to do anything that undermined that agreement which OPEC have made".
The Government and the Department of Energy were in the direct game of boosting and supporting the cobbled-up arrangement made by OPEC at the end of January. It was not BNOC's judgment or advice that determined the policy. It was a decision between the Treasury and the Department of Energy to back OPEC in January and February of this year.

Mr. Michael Morris: Is the hon. Gentleman seriously suggesting that Governments, particularly through the Foreigh Office, have not consulted with OPEC?

Mr. Rowlands: That quotation was not a statement about consultation; it was a very specific and clear conclusion concerning the attitude taken by the Treasury to the whole OPEC arrangement. It was what the Committee suspected — that there was some form of cahoots between the Government and OPEC in propping up the prices.
This is very revealing of the attitudes and positions we have taken in our now rather schizophrenic nation, split between a traditionally industrial economy and some kind of all-type economy. It shows the kind of dilemmas that we are facing. The Minister did a lot to try to disabuse the Committee of the idea that this relationship existed, but here is a senior Treasury civil servant making it very clear why the Government were in the business of trying to prop up the price in January and February—to back OPEC. This £20 million is our fee for becoming at least an associate member of OPEC, as far as I can see.
I resent the way in which the abolition of BNOC has been presented, as if it were a losing state trading organisation like some others we have seen in the past. It is not fair. The loss was entirely the result of the Government commitment and decision to try to prop up


the price. Curiously enough, I share the views of most hon. Gentlemen who have spoken tonight. I do not think that we should have been in the game of trying to prop up the price. In the long term there is a great need for a lower price to help the rest of our economy to start to regenerate and grow again. I represent a community that needs that. The Government should be honest about it and say that that is what they have been up to and not allow, either incidentally or accidentally, the blame to fall on what has been a successful trading organisation.
I do not think that the losses of the past few months can or should be used as an argument for abolishing BNOC. I share the sentiment of the Committee that the decision to prop up the price was wrong. I suspect that, certainly in January and February, it was against BNOC's professional judgment. Behind the kind words, the speech of the right hon. Member for Guildford (Mr. Howell) was a pretty damning one.
Who has paid the penalty for the pretty big errors in this regard? Has it been the Ministers who made the decisions or has it been the skilled professional people who will lose their jobs as a result of the decision to abolish BNOC?
We were told yesterday that the decision had been taken because of
a major change in the structure of the oil market away from term contracts and towards spot
and that
this trend is unlikely to be reversed in the near future".— [Official Report, 13 March 1985; Vol. 75, c. 305.]
I have already commented on the fact that this seems to be a very temporary statement, to say the least, in terms of its assessment of the trend.
There was no reason why BNOC could not have moved to a spot-related, market-related price instead of being abolished. Statoil has been doing it since the end of last year. The Norwegian state oil company has been doing it and has also gone on to a one-month or two-month contract basis. BNOC could have done that and adjusted its position and trading to deal with the market trends that we face in the near future. The corporation was perfectly capable of adjusting its affairs and I rather believe that it wanted to, but for some of the reasons that I have mentioned it was not allowed to do so in January and February of this year.
I think that most hon. Members who took part in the discussions in December thought that that was the last time that we would be discussing this matter. I know that I did, but perhaps I was more gullible and naive than most members of the Committee. I rather assumed that BNOC's judgment would be endorsed and that we would move in January and February to adjust the situation. It was not adjusted, and more losses occurred, but it was not BNOC's fault.
The other major aspect of the abolition of BNOC is the question of security of supply. As the right hon. Member for Guildford and many other hon. Members have said, from the beginning the case for BNOC state trading—made not by Socialists but by successive Secretaries of State—was that it had a function and a role to play in security of supply. I shall read out later the passionate speeches of the then Secretary of State for Energy in support of the fundamental role that BNOC should play in ensuring security of supply. It was not the Socialists but the present Chancellor of the Exchequer who decided to

maintain BNOC. The Minister of State referred yesterday to an experimental period, but that is not the way in which it was described in all the debates on the Oil and Gas (Enterprise) Bill.
On many occasions the present Secretary of State for Energy has reaffirmed BNOC's fundamental role as an instrument to secure supply. It was argued during the debate on the Petroleum Royalties (Relief) Bill that we could afford to abolish royalties in kind on all new fields because we had 51 per cent. of the shares and a national oil corporation that ensured the security of our supplies. I do not need to justify the basic role BNOC has played and should continue to be allowed to play in ensuring the security of our oil supplies. The speeches of the present and former Secretaries of State for Energy and the Minister of State will suffice and, no doubt, we shall consider them in due course.
I should like to examine more closely the argument of Conservative Members that BNOC has no real role and that our supplies will still be secure because of our participation agreements. I do not agree that BNOC has no physical control over oil. In 1979 BNOC brought oil into Britain. The right hon. Member for Guildford said that he found BNOC inflexible about bringing oil into Britain. I believe that, understandably, he made adjustments to ensure that the corporation could act more flexibly in the future. I recall the right hon. Gentleman making such statements at various times during those crucial months in 1979.
The corporation has physical and financial control over a considerable quantity of oil. BNOC finances cargoes weekly and monthly. It is involved in the game of buying, selling and moving cargoes of oil. A quantity of 800,000 barrels of oil a day is not small beer. The corporation has had the means by which it could, in an emergency, bring oil into Britain, and that is why successive Secretaries of State have supported it.

Dr. Michael Clark: Does the hon. Gentleman agree that BNOC has no storage facilities, that it has a statutory duty to preserve the national interest in relation to oil and that that duty will still be vested in the Government after the corporation has disappeared?

Mr. Rowlands: BNOC does not have storage facilities, but it has something that is much more important —the ability to buy cargoes. BNOC has some control at any particular time over a percentage of its oil. I remember the Select Committee on Energy discussing at some length the reason why Mr. Goskirk and company were so keen not to reduce the large volume of oil in which BNOC was trading. The reason was that the larger the volume of oil, the larger the amount to which BNOC would have easy access. BNOC trades in 800,000 barrels of oil a day— 350,000 barrels of participation oil, 300,000 barrels of oil received as royalty in kind and another 150,000 barrels of commercial oil. BNOC is involved not just in paper agreements; it physically buys and moves such quantities of oil. The Minister of State gave the impression that, although the Government will no longer exercise their options on the 350,000 barrels a day of participation oil, they will still have oil received as royalty in kind. The oil and pipelines agency will not have that royalty in kind. Will the Minister confirm that the agency will not trade even in the royalty in kind oil? The agency will merely have the same option to buy at a future date as BNOC had.
What are the terms and nature of the participation agreements? Will the Minister explain about the rights to opt for royalty in kind oil? Am I correct in thinking that every participation agreement requires a minimum six months notice before the option to acquire rights can be enforced? Up to 12 months notice may be required under some of the participation agreements before the option can be exercised.
The House was given a misleading impression yesterday that we can have, as an alternative to a national oil corporation, pieces of paper called participation agreements which will be lodged in an agency in the Department of Energy, which means that we can implement the agreements when the crisis comes. I hope that the Gulf war will wait six month while notice is served. I hope that the crisis will hang on while participation agreements are enforced under this new arrangement.
Yesterday the Minister told us about the new alternative arrangements, which meant that we could go back last night and sleep happily in our beds because the right hon. Gentleman had his participation agreements and royalty in kind oil. How quickly will the Minister be able to implement the participation agreements if a crisis arises? If the Minister cannot give a satisfactory answer, he will be offering a totally misleading impression that there is security when there is none.

Mr. Portillo: Does the hon. Gentleman believe that the Energy Act 1976, which was enacted by the Labour Government, is defective in this respect?

Mr. Rowlands: The legislation envisages a much more serious and draconian crisis than the types of crisis about which we have been talking. That Act was available for use in 1979, but, rightly, the then Secretary of State did not use it. There is a differece between crises that have concerned the International Energy Agency arrangements and normality. Sometimes—as in 1979—the shortages are artificial but have a dramatic effect on the market and fears about running out of oil. The 1976 Act is a major piece of emergency legislation.
BNOC could play a much more valuable role in stabilising the market and ensuring security of supply. I think that there has been common ground on that point. In December the Minister of State agreed with our proposition that the Energy Act was not the weapon to deal with the types of crisis in which we envisaged BNOC could assist us.
Yesterday we were told that our oil supplies were secure because of the combination of participation agreement and royalty in kind. Will the Minister describe what will happen if the agency wants to exercise these rights? About what sort of time scale are we talking? What sort of action will the agency take? Secondly, will the Minister confirm that he will not have any royalty in kind oil and that he will only retain the option and not trade in it?
The abolition of BNOC will have serious consequences. Many of the smaller independent British oil companies have used BNOC as an important form of trading for their oil. They have sold 100 per cent. of their oil to BNOC. As evidence to the Committee showed, many of them do not want to set up alternative sales organisations and do not want to come under the umbrella of the major multinationals. They found BNOC a helpful

means of marketing their small amounts of oil. It offered them some security. That has been thrown out of the window overnight. What consultations took place with Brindex and the small British independent oil companies about his proposals?

Mr. Hayward: The hon. Member is talking about the nature of small oil companies and the spot oil price negotiations. Given the dramatic change that has taken place and the increasing use of the spot market, is it not likely that the spot market will become much more sophisticated in buying large and small quantities of oil? That is one of the key factors that justifies the changing circumstances in relation to BNOC.

Mr. Rowlands: I do not know any more than the hon. Gentleman does. The Government are too coy to suggest that it might be a permanent trend on the spot market. We have been talking about trends in the near future. That is about the best that one can say. We know what is happening at the moment, but we have no clue as to whether the trend will be permanent. The Iranians and the Iraqis are hotting up their war. We do not know what impact that may have on the oil markets in the coming months.
We seem to have short memories and quickly to forget the lessons that we have learnt. BNOC was established to ensure security of supply and the destination of North sea oil. It was found useful by successive Governments. The problem created partly by the Government trying to fix the price of oil and the changing market due to the oil glut is not the basis upon which to do away with an organisation that has served a useful purpose and could continue to do SO.
That is the vital point that the Opposition wish to make. We believe that the alternative to BNOC that is offered is a pathetic substitute for a proper national oil corporation fulfilling its proper duty. It will fatally weaken our control of our oil supplies. When the public's perception of this matter begins to grow I do not think that it will receive its agreement or the cosy unanimous support that the Minister has had from the Conservative Benches tonight.

The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): It was nice to hear the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) speak in more moderate terms than he did yesterday but a general without troops is not in a strong position.

Mr. Rowlands: I thank the Minister for the compliment.

Mr. Buchanan-Smith: I give the hon. Gentleman credit for being a general, but I shall not comment upon how strong a general he is. We should perhaps wait and see.
The hon. Gentleman raised a number of interesting and relevant points. A night's reflection, perhaps having read the comments of those who understand such matters in the oil industry, the newspapers and, on the evidence before us, the fact that other Opposition Members do not appear to support his views, may have helped his overnight change of tone. It is a change that I welcome. I am delighted to debate the matter with him in the terms in which he introduced it today.
I should like to express my thanks to my hon. Friend the Member for Havant (Mr. Lloyd) and the members of


his Committee for the way in which they conducted their inquiry and reported. They had to report within a short time. I apologised to him and through him to his Committee that I was unable to help him more about timing during the previous debate, and I am left in a similar position today. I certainly accept what the Committee says. Adequate time is desirable when liabilities have to be notified to Parliament. My hon. Friend and the members of the Committee will realise that neither the liability nor the need for an Estimate arose until the decision was made to maintain BNOC's price in January and February. Once that decision was taken, we immediately notified Parliament.
In accordance with the undertaking that I gave to the House in our previous debate, I ensured that all the information was made available to my hon. Friend and his Committee immediately. I hope that my hon. Friend will accept my apology and understand the reasons behind it. As in December, the Committee had little time in which to work, but it produced a thorough and detailed report. I am grateful for that.
The Committee's report and the way in which it took the evidence raises the issue of BNOC's role. I want to make it plain to the House, as I have previously, that, having considered BNOC's role, I saw it as related solely to the short term. I tried to make it plain to the Committee that I did not see BNOC being able to influence price movements in the long term. The Government have a policy on prices, as I told the Committee, and I wish to make that clear also to the hon. Member for Orkney and Shetland (Mr. Wallace).
The Government's policy has been that BNOC should at all times avoid doing anything to destabilise the market. That is what it has done. The Government do not have a view on the long-term price of oil. We have no way of achieving a price. Such a policy objective would be academic, because we have no means of achieving it.
I take issue with the hon. Member for Merthyr Tydfil and Rhymney because if he believes, as he seemed to say today, that BNOC has had no influence on the market in the past, I wonder what he thought BNOC's role in fixing prices was. That was the thrust of his remarks. No Government have seen BNOC as being able to prop up prices. It cannot do that. What it can do, and has done successfully, is in the short term to provide a bridge between one position and another. When there have been risks and the possibility of a destabilised market, it has been able to act to the United Kingdom's benefit.
The hon. Member for Merthyr Tydfil and Rhymney asked me to comment on the advice that BNOC had given, particularly in January and February. BNOC indicated ways in which potential losses could be minimised, and that was a perfectly proper action for it to take. It then sought the views of the Government on wider national issues. Thereafter it made its proposals for the period in question. There is no secret about the views of BNOC. As hon. Members have pointed out, one of its objectives is to trade profitably.

Mr. Rowlands: The right hon. Gentleman made the important observation that BNOC put proposals to the Government, who then had to consider the wider implications. Presumably the proposals would have saved BNOC money, but the Government believed that there

was a broader national reason for not implementing them. Is that a reasonable conclusion to draw from what the Minister is saying?

Mr. Buchanan-Smith: There was absolutely no difference on this occasion from what occurred previously. BNOC discusses its views with the Government and thereafter, taking into account the wider interests, makes its proposals. That happened on this occasion. There was no difference between what happened then and what happened, say, last summer, in 1983, or on other occasions. Indeed, the chairman of BNOC made that point plain. When he gave evidence to the Select Committee just prior to last Christmas, he said that there had been no change in the procedure.
A central part of the Select Committee's report rests on the recommendation that BNOC should move towards a pricing system better related to the market and better suited to the long term. I very much take that point because it underlines what I said in my evidence—namely, that if one does not have the abilitiy to influence in the long term, one can only follow market and spot prices.
That was a major factor to be taken into account, and in my announcement yesterday I pointed out what happens if one finds oneself in the situation simply of following the market. That was in line with the Select Committee's recommendations. I was concerned, because if that was to be our policy for the future BNOC would have to make more frequent price changes, and those changes would be related to the spot market. That would cut across the objective, to which I referred, of trying to maintain stability in the market, so stabilising market trends.
More important — particularly in relation to the comments of the hon. Member for Merthyr Tydfil and Rhymney—we had to consider what would happen if in future BNOC simply reacted to, and followed, market prices by means of a formula, and there are a number of means by which that could be achieved.
We have moved one stage beyond the recommendation of the Select Committee. We must consider what purpose there is in having a body of that nature, particularly if it is simply operating a formula. If it is operating only by that means, its ability to make a choice is severely limited. That, therefore, calls into question the point of maintaining a body whose job is simply to follow the market.

Mr. Rowlands: Has that not been the position all along?

Mr. Buchanan-Smith: That has not been the position from the start, because, as I have explained on a number of occasions, BNOC has acted effectively and properly in short-term situations to try to avoid the market being destabilised.
Another point in the decision to abolish BNOC, with which I dealt in my statement yesterday, was the question not of making losses but of the change that has taken place in the market. That change has affected BNOC to the extent that we have had a considerable movement towards spot rather than contract sales.
That is not a United Kingdom phenomenon. It is happening worldwide. The pattern of spot sales has changed from there having been 500,000 barrels a day of such sales in 1979 to over 6 million barrels a day in 1984. Most of that growth took place in 1984. In other words, the change has taken place recently.
BNOC has lost its contract sales and it has increasingly had to operate on the spot market. When operating in that market, without the means of contract sales, BNOC's ability to influence the market in the short term has been diminished because its previous influence was related to its contract sales. As I say, it has lost those contracts.

Mr. Rowlands: The Minister must be fair. BNOC lost many of its contracts because the Government did not allow it to adjust prices downwards to keep its contract sales.

Mr. Buchanan-Smith: That is flying in the face of the facts. As I pointed out, what is happening is not a United Kingdom phenomenon. Were the hon. Gentleman's remarks correct, the situation would have tended to confine itself to the United Kingdom market, whereas it is a worldwide movement which has been commented on by many journalists and others. It was shown in evidence to the Select Committee to have arisen as a direct consequence of the surplus of oil in the market. With that surplus, contracts are less attractive because customers for oil no longer require the security that contracts give. At times of shortage of supply, contracts are built up. When we move into periods of surplus, there is a move away from contract prices.
That view was put to the Select Committee not only by me and by other Government representatives but by witnesses from outside Government. When the market moves from contracts to spot, we find ourselves in a totally different situation. That change in the market is directly reflected in BNOC's activities.
I have pointed out that BNOC had a limited ability to influence prices in the short term, and I have given credit to the corporation for the way in which those who have been responsible have worked successfully, efficiently and professionally when they have been able to have some influence. That occurred as recently as last summer, although the market was rapidly changing.
I agree with my hon. Friend the Member for Erewash (Mr. Rost) that we have accepted and reacted to the reality of the market, knowing that BNOC has outlived its ability to have any influence on the market.
It is important to remember that BNOC has many other functions. Indeed, the latter part of the speech by the hon. Member for Merthyr Tydfil and Rhymney emphasised its function in relation to the security of supply.

Mr. Wallace: The Minister said on 18 December, and again today, that the Government's policy on prices is to avoid destabilisation in the short term. He explained to the House why, having regard to the change towards more dealing on the spot market, he does not believe that BNOC is capable of fulfilling that role. If we assume that it is still the Government's policy to ensure stable markets in the short term, how does he see the Government implementing that policy?

Mr. Buchanan-Smith: That opportunity is no longer available, because the market has changed. Unlike the hon. Member for Merthyr Tydfil and Rhymney, I live in the present and look to the future, not to the past when different factors obtained. That is why I said that we are facing reality and making sure that we have the correct machinery to deal with the future position.
I believe strongly that the security of supply should be the responsibility of the new agency. The retention of our

participation agreements means that we can underpin all the other measures that are already in place for security of supply. However, it must be remembered that participation agreements are not the only factor in ensuring security of supply. Our main line of defence will be our agreements with the oil-refining and marketing companies. The Select Committee examined that matter earlier. Our ability to have access to participation oil and to royalty in kind underpins our immediate security measures. The hon. Gentleman was right to say that participation agreements can be exercised only at six months' notice. I did not claim that we would have immediate access to participation oil. However, if the Government believe that they will need such oil in the medium term, they can activate the participation agreements. That is why we have retained that function and given it to the new agency.
The hon. Member for Merthyr Tydfil and Rhymney also asked me about royalty in kind. As one of my hon. Friends said, that provision will remain in effect for all fields that came on stream before April 1982. The provision will give us a substantial amount of oil. Between now and the end of the decade, it will average 10 million tonnes a year. The agency will sell that oil on the Government's behalf.

Mr. Rowlands: At what price?

Mr. Buchanan-Smith: In accordance with the market. It will have to sell the oil in accordance with market prices. The retention of the power to participate and the provision for royalty in kind, together with our other measures, will ensure the security of supply.

Dr. Michael Clark: Will my right hon. Friend assure the House that when the agency sells the oil that it gathers from royalties it will sell at such a price that we shall not need Supplementary Estimates for the agency in the future?

Mr. Buchanan-Smith: The agency will handle royalty in kind simply as a marketing agency on behalf of the Government in order to obtain the best price that the market can offer at the time. The reason why we propose legislation on this matter—this answers a point raised by the hon. Member for Orkney and Shetland—is that it is a convention of the House that, where the character of an existing body is changed considerably, it is proper to proceed by way of legislation. Since the character of the new body, as its title shows, will be very different, we believe that it should be seen as an agency, nor as something more.

Mr. Rowlands: The Minister has made an important point about how royalty in kind will be treated. It means that the new agency will be trading in 300,000 barrels of oil a day. What percentage of the existing BNOC staff will be transferred to the agency to carry out that function?

Mr. Buchanan-Smith: It is too early to say precisely how many staff will be needed to carry out that function. Because of the sensitive nature of the announcement that I made yesterday, discussions with the chairman of BNOC started only yesterday. The facilities and staff needed for the new agency will be discussed urgently and quickly with the chairman and those responsible. At this stage, 24 hours after the announcement, neither the hon. Gentleman nor the House would expect me to be able to answer that question.
The debate has been extremely useful in two senses. First, it has rightly given us the opportunity to debate an important report from the Select Committee on Energy. Secondly, it has given us a wider opportunity than the statement gave us yesterday to consider the reasons for the change that we propose. As several hon. Members said this afternoon, there is a direct link between the two. The recommendation of the Select Committee that BNOC should move towards a market-related price system is sensible and understandable. I believe—I hope that this point is on the 100 per cent. tick list mentioned by my hon. Friend the Member for Rochford (Dr. Clark)—that we have achieved that. Although we are going beyond what the Select Committee recommended, we are facing reality. In the changed market circumstances, we do not need a body of the nature or size of BNOC to carry out the limited functions recommended by the Select Committee. In that sense, I am grateful to the Select Committee for recommending that, in the short term, the Supplementary Estimate should be agreed by the House.

Question deferred, pursuant to Standing Order No. 19(2)(c) (Consideration of Estimates).

Falkland Islands (Foreign Affairs Committee Report)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]

The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I am glad that the House has the opportunity this evening to discuss the Government's policy towards the Falkland Islands. I am grateful to the Select Committee on Foreign Affairs, under the chairmanship of my hon. Friend the Member for Stroud (Sir A. Kershaw), for the important contribution which its report will make to the debate. Its wide-ranging review of the many questions arising was published in December last year. The Government's observations on that report were made available to the House in February. These are the two principal documents for our debate tonight. In the limited time available this evening, I shall not be able to cover the many subjects dealt with in those documents. My hon. Friend the Member for Mid-Sussex (Mr. Renton) will be ready to respond at the end of the debate to points that hon. Members may wish to pursue.
I hope that the House will forgive me if I am not able to remain for the whole of the debate. I have to attend an engagement with President Mubarak of Egypt which it would not be possible for me to escape. I apologise to the House.
I wish at the outset of this debate to remind the House of the twin themes that guide our policy towards the Falkland Islands and Argentina. The first is our determination to fulfil our commitments to the Falkland Islanders. The second is our efforts to promote better relations with Argentina.
Britain's responsibilities towards the islanders are clear. They are to enable them to live in a climate of peace and security, under a Government of their own choosing, and in that setting to promote their political, social and economic development.
Our concern for the political development of the islanders has been reflected in the way in which we have considered with them the proposals for a new constitution. The islanders consider — and we agree — that the Falklands should have a modern constitution which matches their aspirations in the circumstances of today.
A Select Committee of the island's Legislative Council had begun work on that subject before the Argentine invasion in 1982. Its report on July 1983 recommended, first, that the number of the elected members on the Legislative Council should be increased from six to eight, to be elected four each from two constituencies within the islands; secondly, that the number of elected members in the Executive Council should be increased from two to three; thirdly, that the islands' Government should no longer be able to appoint two members to the Executive Council; and, fourthly, that in each council the two ex-officio members would no longer have a vote. Her Majesty's Government have accepted these recommendations.
Some concerns were expressed in the islands about the Government's decision to promulgate separate constitutions for the Falkland Islands and for the dependencies on the ground that this might imply an intention to relinquish sovereignty over the Falkland Islands while


retaining the dependencies. I can assure the House that there are absolutely no grounds for that anxiety. We have no such intention. Our position on sovereignty is firm.
That is one of the few points on which we take a different view from the Committee. I have to say that we were disappointed that its report did not reach a categorical conclusion on the legal validity of Britain's title to the Falkland Islands. Successive British Governments have had no such doubts. In their view—and in our view—the islands are British territory.
Even so, there is good reason to make separate constitutional provision for the two territories. Although the dependencies have for convenience been administered from Port Stanley, they are a separate dependent territory with their own requirements. Unlike the Falkland Islands, they have no permanent population and, therefore, no need for representative government.

Mr. Tam Dalyell: How can the right hon. and learned Gentleman say that successive British Governments have had no doubts? The Government in which Sir Edward Grey of Fallodon was the Foreign Secretary had the Gaston de Bernhardt report. In the 1930s, Campbell and other senior members of the Foreign Office noted that our case had certain weaknesses. In the 1940s, the Marquis of Willingdon went to Latin America. As a result of that visit, there is a file to be opened in 1991 in the Foreign Office called "Proposals to Reunite the Falklands with Argentina". Those who talk about reunification must at least have some doubts. Come off it.

Sir Geoffrey Howe: The hon. Gentleman is entitled to the view to which he has clung so tenaciously, but in fact and in practice the attitude of successive British Governments has been founded on the proposition that I have explained.
I come now to the close relationship between the two constitutions about which I was speaking. The close relationship that has long existed between the two territories will be reflected in the new arrangements that we propose. The Governor of the Falkland Islands will also be commissioner for South Georgia and the South Sandwich Islands. In this capacity, he will consult the Executive Council of the Falkland Islands on matters relating to the dependencies which might affect the Falkland Islands.
The new constitution for the Falkland Islands contains one important new element. The island councillors expressed the view that the constitution should include a reference to their right of self-determination. We agree with them. Accordingly, the preamble to the human rights chapter of the constitution now recalls the provisions on self-determination from article 1 of the International Covenant on Civil and Political Rights. This was adopted by the United Nations General Assembly in 1966. The United Kingdom ratified it in 1976.
Argentina has not subscribed to that covenant. On the contrary, the Argentine Government seek to deny the Falkland Islanders the right of self-determination. In our view, the Falkland Islanders, like any other people, have that right. They make up a peaceful and homogeneous community which has developed democratic institutions over more than a century. Their right to self-determination will now be reflected in their constitution, and we shall uphold it.
It has been suggested that these provisions might derogate from the sovereignty of Parliament. That is not so. The ultimate authority in matters affecting any dependent territory is of course this Parliament.
The constitutions are being promulgated in accordance with the normal procedures. They were approved by the islands' Legislative Council on 16 January. They are embodied in Orders in Council which will be made under the provisions of the British Settlement Acts 1887 and 1945. Drafts of the two orders were placed in the Library of the House on 24 January. A revised text, taking account of further consultations with the islands' councillors, was placed in the Library on 11 March.
There is one new point in the revised text that I should mention to the House. We have accepted the wish of the islanders to revert to the title of Governor rather than Civil Commissioner. The latter title was introduced, at the same time as that of Military Commissioner, immediately after the liberation of the islands in June 1982. We have taken the view that the introduction of the new constitution is the right time to return to the more familiar titles of Governor and Commander British Forces. The title of Governor is, of course, the customary one for a dependent territory of this kind.
The Foreign Affairs Committee, in its report, recommended that the House should raise no objections when those orders come to be laid. The Government, of course, warmly welcome that recommendation.
Let me now tell the House something of our efforts to repair and develop the islands' economy. The tasks immediately after the conflict were daunting. Much of the infrastructure was damaged or destroyed. Local resources were overstrained. Today, however, I am glad to be able to tell the House that, although — inevitably — some constraints remain, and will continue to hamper the pace of future development, the position has greatly improved.
The longer-term needs of the islands were analysed by Lord Shackleton in his 1982 economic study. The Government responded to this within only three months by making an allocation of £31 million for spending over a five or six-year period. We have not been able to accept every one of the recommendations in that report, but Lord Shackleton himself observed in the other place that he doubted
whether any author of a report has had so much of that report actually implemented by a Government"— [Official Report, House of Lords, 6 December 1983; Vol. 445, c. 1020.]
We are making progress too in areas not covered in the Select Committee report. Following the terrible fire which
destroyed the Stanley hospital in April 1984, the Government promptly agreed to finance the construction of a replacement. This will be a hospital on the same site shared between the civil and military authorities. Detailed planning and design work is well advanced. Meanwhile, Port Stanley's electricity and water supplies are being improved.
The Government welcome the Foreign Affairs Committee's acceptance that a gradual approach to land reform is right. Four farms have now been sub-divided under arrangements made by the Falkland Islands Government. Of the 27 owner-occupied farms now on this land, 12 were in existence before the conflict and 15 have been created subsequently.
The Falkland Islands Development Corporation will have an important part to play in promoting a programme of land redistribution in keeping with demand.
That brings me to another of the few points on which the Government take a different view from the Select Committee. I have to say that we do not accept the criticisms in its report of the Chief Executive, Mr. David Taylor. I do not believe that the Committee has given sufficient weight to the practical difficulties that face the small administration in the islands. Development needs to be a gradual process, keeping in step with the needs and resources of the islands.
Another of Lord Shackleton's recommendations was the proposed declaration of a 200-mile exclusive fisheries limit around the Falklands. The Government are of course well aware of the activity of foreign fishing fleets in Falklands waters and the consequent danger of over-exploitation of fish stocks. Under normal conditions, the unilateral declaration of a 200-mile limit could well have been an appropriate response because it would offer a means of ensuring conservation and management of this valuable resource. In considering that possibility in the circumstances of the Falklands, however, the Government have had to give full weight to the serious difficulties that could arise in that context. The Select Committee, quite rightly, drew attention to the political and practical problems of enforcing and policing a unilaterally imposed fisheries zone in an area where British sovereignty was in dispute. For that reason, the Committee was not convinced that the establishment of such a zone could be justified.
The Government take the same view. For the same reason, we have decided instead to explore possible ways in which to establish a multilaterally based conservation and management regime. We are therefore taking steps to develop that approach.

Mr. Austin Mitchell: A 200-mile limit seems crucial to the development of the Falklands to me and others who have been there. If we do not set such a fishing limit and enforce it with our present naval presence, is that not tantamount to saying that we do not have confidence in our claims?

Sir Geoffrey Howe: No. It is a realistic recognition, such as commended itself to the Select Committee, of the fact that there is a dispute about sovereignty in the area. It would not be right to conclude in the face of that that existing naval forces would be appropriate or sufficient to enforce a claim, nor would that be the most secure foundation for the protection of fisheries. That is why we have taken the view that we should explore the possibility of establishing a multilaterally based conservation and management regime.

Mr. George Foulkes: It would be helpful to the House if the Foreign Secretary could say which countries he envisages being involved in such a multilateral regime and confirm that Argentina will be one of them.

Sir Geoffrey Howe: At this stage, I do not think that I can say more about how these matters are being explored. It will be complicated, but we are taking steps to develop the proposal. It would not be helpful to go into detail now. The hon. Gentleman's point must be borne in mind, but I cannot say more about it now.
It is clear that political and economic development on the lines that I have described can be achieved only if the

islanders are sure that they can live in peace, free from the threat of a further attack. I emphasise that it is for that reason and for no other that we maintain in the islands the minimum level of forces necessary to ensure that there is no repetition of the tragic events of 1982.
As we have said many times, our military dispositions have no wider purpose. Allegations, for example, about a "NATO base" are manifest nonsense.

Mr. Robin Maxwell-Hyslop: Does my right hon. and learned Friend agree that there is no realistic exploitation of the waters that he has mentioned by British fishermen? Once there is an all-weather airport at Mount Pleasant, which would mean that fishery crews could be rotated, would it not be a more positive approach for British fishery firms to participate fully in the exploitation of those resources?

Sir Geoffrey Howe: That is one of the possibilities that might flow from the establishment of air communications, but we must still consider the framework within which such participation could take place. That is why we have reached the conclusion that I have suggested.
There is a related matter on which we take a rather different view from the Committee. It suggested that the time was now ripe for us to give unilateral undertakings on security — for example, on lifting the Falkland Islands protection zone. A declaration of cessation of hostilities by Argentina would, of course, be a positive step, but that could not, in the Government's view, be the sole trigger for action to lift the zone.
I should now like to say something about the role of the new airport at Mount Pleasant, 30 miles from Port Stanley. That airport has always been intended to play a dual role — first, of course, to promote the security of the islands, and, secondly, and by no means less important, to make a major contribution to their economic development. The main airport runway will open in May. For all-weather facilities, a second runway is needed, and it will be completed by February next year.
The construction of a full modern airport in such a short time, and on such a remote site, has been a remarkable achievement. British engineering, management skills and the efforts of the work force have made this feat possible. I am sure that the whole House will wish to pay tribute to that success.
The airport will have the important function of providing a rapid reinforcement capability. As my right hon. Friend the Secretary of State for Defence has explained, once the aiport is fully operational it should be possible to reduce the numbers of permanently stationed forces on the islands.
The Government have from the first intended the airport to have a major and growing civil role as well. Lord Shackleton recommended the provision of better communications with the outside world and stressed the importance of air services. Mount Pleasant airport will meet those needs. Its main runway will be capable of handling the largest long-range aircraft. The completion of the airport will make possible the establishment of commercial air services linking the Falklands with the outside world.
I come, finally, to the future of this country's relationship with Argentina. Once again, I assure the House that we attach great importance to the improvement of our relations with Argentina. Even before the


establishment of a democratic Government in Argentina, which we warmly welcomed, we were taking steps to that end. As long ago as September 1982—within months of the end of the conflict—I took steps as Chancellor of the Exchequer, at the International Monetary Fund meeting in Toronto, to promote and reach agreement with the Argentine Government for the withdrawal on both sides of the financial restrictions that were imposed at the start of the conflict. Britain implemented that agreement in full, and immediately. Argentina has still not done so.

Mr. Dalyell: Will the Foreign Secretary allow me one question as he has to leave the Chamber? Can he assure us that all relevant papers which were relevant to the considerations of Lord Franks and his colleagues were made available to them? Have any relevant papers somehow become available since the Franks committee conducted its deliberations?

Sir Geoffrey Howe: I have no reason to doubt that the answer is yes, but would not swear so without having had much more notice of the question. If the hon. Gentleman wishes to press such matters, he is familiar with the custom of tabling written questions. I hesitate to encourage him further in that.
Since September 1982, we have continued to make genuine and sustained efforts to find a basis for direct talks with the new Argentine Government. With the wholehearted support of all my colleagues, I took the greatest possible interest and the greatest possible care in arranging the scene for the talks in Berne which took place last July. They broke down because the Argentine representatives took a position that ran directly counter to the basis for the negotiations that had been explicitly agreed by them in advance. That was a sadly missed opportunity.
The Argentine representatives knew then, and the House knows now, that we are not prepared to discuss with Argentina sovereignty over the Falkland Islands. The Government believe that Argentine actions in 1982 have ruled that out. And yet the Argentine representatives insisted at Berne, in the face of the clear prior agreement to the contrary, that no progress could be made towards normalisation without the certainty that a mechanism would be established that would in practice lead to a transfer of sovereignty.

Dr. David Owen: The Foreign Secretary said that the Government are not prepared to discuss sovereignty. I understood that they were not prepared to discuss the transfer of sovereignty from the United Kingdom to Argentina. There is a difference, and there is another option, which is to discuss shared sovereignty. Is the right hon. and learned Gentleman ruling out discussions on any possible sharing of sovereignty?

Sir Geoffrey Howe: The point which we have made throughout, and which was understood by the Argentines at the time, is that we are not prepared to discuss sovereignty. There are many ways in which sovereignty can be discussed. We do not think that it is right to do so. We think that it is right to begin addressing ourselves to the many practical questions—

Dr. Owen: With respect, the right hon. and learned Gentleman has not answered the question, which was specific. The White Paper—the answer to the Select

Committee—refers to not being prepared to discuss the transfer of sovereignity from the United Kingdom to Argentine. But there is another option — shared sovereignty, which is part of the United Nations charter, to which we are a signatory. We need to remind ourselves that we went to war in the south Atlantic invoking the United Nations charter and our right to self-defence.

Sir Geoffrey Howe: With great respect to the right hon. Gentleman, I did answer the question. I said that there were many ways of discussing sovereignty, and many arrangements that could be suggested for it, but we are not prepared to discuss sovereignty. As we have made clear, we are anxious to begin discussing the range of practical questions which could sensibly be addressed and which we thought would be sensibly addressed at that talk in Berne.

Mr. Maxwell-Hyslop: Will my right hon. and learned Friend give way?

Sir Geoffrey Howe: If my hon. Friend will forgive me, I do not want to give way too often, and I must make headway on this point.

Mr. Maxwell-Hyslop: It is an important point.

Sir Geoffrey Howe: I shall give way after I have made this point.
The reaction of the Argentine representatives at Berne was repeated explicitly by President Alfonsin when he spoke at the General Assembly of the United Nations on 24 September last year. His Foreign Minister said publicly in December that negotiation must be about an indivisible package, which must include sovereignty, and the Argentine Government have since maintained that position. The Select Committee deals with the matter in its report, saying:
It is clear that when referring to negotiations on sovereignty, the new Argentine Government is pursuing a policy essentially no different from that of its predecessors: that such negotiations, once begun, must lead eventually and inevitably to the relinquishment of the United Kingdom's claim to and administration of the Falklands.
It is the indivisibility of that link, as set out in all the approaches made to the subject by the Argentine Government, that is so totally contrary to any sensible foundation for discussion of other matters. It is for that reason that we have been trying to find a way of discussing those other matters. We agree with the assessment that was made by the Select Committee.

Mr. Maxwell-Hyslop: I am most grateful to my right hon. and learned Friend for giving way. I wanted to refer to the point that the right hon. Member for Plymouth, Devonport (Dr. Owen) made in his intervention. Will my right hon. and learned Friend remind the House that the right to self-defence does not depend on the United Nations charter, and antedates by centuries beyond mind the United Nations charter?

Sir Geoffrey Howe: I am sure that my hon. Friend is right about that. In so far as his intervention fortifies my position, I am grateful for it.
Those who call on us to negotiate on the sovereignty of the Falkland Islands should consider what exactly it is that they are asking us to do. For Argentina, such negotiations are intended to have only one outcome: the transfer of sovereignty, irrespective of the wishes of the islanders. It is for precisely that reason that we have devoted so much effort to finding a basis for direct talks


with Argentina on a range of practical issues, where progress is possible to the benefit of both sides. Quite frankly, that is the only realistic policy, and we shall persevere with it.
Earlier this year we transmitted the latest in the series of messages that we have been exchanging with the Argentines through the protecting powers. The details must remain confidential. But that message once again put forward practical steps that would enable confidence to be re-established between our two peoples. We look to the Argentines for a constructive reply.
The improvement of commercial and economic relations is a natural starting point. Both sides have a clear interest in improved trade. The Argentine Government have publicly stressed the need to increase their exports as a contribution to tackling their daunting economic problems. They could take a major step forward by agreeing to the reciprocal lifting of the trade embargo that has been in place since the conflict. Both Her Majesty's Government and the European Community have several times proposed that course.
As I have already explained to the House, we have been continuously helpful in our approach to the international arrangements for the rescheduling of Argentina's official debt in the Paris Club. When we come to follow that up bilaterally, our approach will be similarly positive.
We have made plain too, and on a number of occasions, that we would be ready to see a visit to the Falklands by the next-of-kin of Argentine servicemen who lost their lives there in 1982. We have recently reiterated to the Argentine Government our readiness to accept a genuinely humanitarian visit by next-of-kin.
The House will, I am sure, be glad to acknowledge that on almost all of those subjects we are working on lines that have been specifically endorsed by the Select Committee.
It is encouraging that the Select Committee has taken the same view as the Government on so many of the subjects about which I have been speaking. The Committee's support fortifies us in our resolve both to fulfil our commitments to the islanders and to persevere in the search for better relations with Argentina. I am confident that those twin objectives will commend themselves very widely to the House.

Mr. Dalyell: On a point of order, Mr. Deputy Speaker. I do not want to be gratuitously rude either to the House or to the Foreign Secretary, but after his speech he really should listen to the replies, not from myself—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I think that in a sense the hon. Gentleman is raising a point of debate rather than a point of order.

Mr. Dalyell: No.

Mr. Deputy Speaker: The hon. Gentleman must come quickly to his point of order for me.

Mr. Dalyell: I should like to say this in the presence of the Foreign Secretary. Bluntly—I am putting this as politely as I can—the right hon. and learned Gentleman has got his priorities wrong. There are other people who will dine with President Mubarak and wear a white tie and tails, but it is important from the point of view of the House of Commons that the right hon. and learned Gentleman should hear, if not what I say, what his colleagues say.

Mr. Deputy Speaker: The hon. Gentleman knows that that is not a point of order for the Chair.

Mr. George Foulkes: The Opposition welcome this opportunity to discuss the future of the Falkland Islands, notwithstanding the slight hiccup at the start of the debate, for which I must apologise to you, Mr. Deputy Speaker, and to the whole House. The official Opposition accept that the Foreign Secretary has other prior engagements, and we are grateful to him for informing us in advance.
I also wish to put on record our thanks to the members of the Committee for their work, particularly the Chairman, the hon. Member for Stroud (Sir A. Kershaw), an old friend and sparring partner of mine, although I do not think he will be surprised to hear that we do not agree with all his conclusions. In fact, one of the remarkable things about the report is that the Committee seems to have provided some conclusions which are likely to be acceptable to us and others which are more likely to be acceptable to the Government. It is interesting to note that it is only the latter that are referred to in detail in the Government's response to the Committee's report.
Without diminishing the importance of the issues surrounding the sinking of the General Belgrano — I have been involved with them, too, along with my hon. Friend the Member for Linlithgow (Mr. Dalyell)—we consider that this matter—the achievement of a stable, acceptable solution to the future of the Falklands—is of even greater importance.
It is our view that fortress Falklands is untenable. It is not in the islanders' real interest. It is enormously expensive in money, in international relations and in its distortion of our defence commitment. Fortress Falklands has been regularly rejected by previous Governments. The Franks report summed it up well when it said:
On every occasion that a new government — or new Ministers—came into office a full range of policy options was put before them. In every case Ministers made a decision of policy and chose to seek a negotiated settlement that would be acceptable to Argentina and to the Islanders. Without exception they rejected the alternative of 'Fortress Falklands', which would have involved the isolation of the Islands from Argentina and probably from the rest of Latin America.
On the distortion of our defence commitment, in its third report, in Session 1982–83, the Select Committee on Defence expressed the hope that the commitment in the South Atlantic would not
indefinitely absorb an unduly large part of scarce defence resources.
It also expressed concern that
if continued at present levels
it
would represent a substantial burden on the defence budget and the economy.
The reduction in recurrent expenditure which the Foreign Secretary and the Defence Secretary have predicted when the airport is completed will not be substantial.
Fortress Falklands in its present form represents over 3 per cent. of the defence budget. With the escalating cost of Trident, the difficulties within the Alliance over the amount of British expenditure on NATO's conventional forces and the difficulty which the Government know only too well is involved in sustaining any real growth in the defence budget, 3 per cent. is a significant sum.
On the wider front, with prescription charges now having been raised to £2 to bring in only £17 million, with


the trauma of Conservative Members up in arms over saving a mere £10 million on student grants and with the prospect of the Chancellor of the Exchequer levying value added tax on almost anything that moves, just to raise revenue, options which could avoid continuing expenditure of this kind in the South Atlantic must be given serious consideration by the Government. Conservative Members who tend to be more impressed by public opinion than by finance may find the results of the Gallup poll carried out last autumn to be more convincing. The British people, in a ratio of three to one, considered that the cost of fortress Falklands was both too great and undesirable.
The Government's policy on the Falklands is peculiarly instransigent. They are willing to discuss and have already transferred sovereignty over albeit a small part of Hong Kong to the Communist Government of China. What is even more relevant, they are also discussing with the Spanish Government the possible transfer of the sovereignty of Gibraltar. Although the Select Committee on Foreign Affairs is not sure
how far the word of Senor Alfonsin's Government can be regarded as an Argentine bond",
in the case of Spain—also a relatively recent democracy — no such question has, rightly, been raised. It is difficult to see why such a question is raised in the case of Argentina.
Recent military appointments in Argentina ought to demonstrate to the Government that President Alfonsin is in charge of events in his country. In January 1983 the right hon. Member for Cambridgeshire, South-East (Mr. Pym), the then Foreign Secretary, said that if Argentina returned to democracy that would be a "big change" and "an advance". He continued:
Equally, or more important, is if there was a Government there which paid due respect to human rights.
On both criteria Argentina has advanced. I am sure that the right hon. Member for Cambridgeshire, South-East would be the first to agree about that. Both Houses of Argentina's legislature are elected. Argentina's head of state is also democratically elected. Amnesty International has commended the vast improvement in its human rights record. Why are the Government not prepared to acknowledge this? Do they not see that by turning our back on such a democracy and by failing to recognise such advances we are in danger of undermining Argentina?
It is nonsense for the Foreign Secretary and the Government to repeat, parrot fashion, that they are willing to discuss bilateral normalisation of relations between Britain and Argentina, when the Foreign Secretary and the Government know — it is so obviously central — that a prerequisite for any such discussions is some agreement to discuss also the future of the islands. I choose that phrase carefully. Argentina is not saying that it must be top of the agenda, or even that the detailed nature of such discussions must be agreed in advance, but that there should be an open agenda which would allow the future of the islands to be discussed eventually. Why is that unreasonable?
Even our former ambassador to the United States, Sir Nicholas Henderson, who was brought out of retirement by the Government to undertake that important task, said in evidence to the Select Committee:
Let us sit down together with an open agenda so that we can define what we are going to discuss later on … I think that is a good basis upon which to approach this subject.
We recognise that both Governments made a genuine attempt at Berne to try to get talks under way. There are

differing accounts of why the talks were interrupted. But just because the formula at Berne did not succeed, that should not be an excuse for not looking at other formulae which can deal with the sticking point of sovereignty. Indeed, it would be considered very strange if, having been willing to try once, the Government continued to reject any other ways of trying to resolve the dispute.
From my visit to Buenos Aires, and from conversations that I have had with Falklanders and Argentines, I believe that it would be possible to move towards a solution which was acceptable to both Britain and Argentina and which would protect the interests of the islanders, which we consider to be important. The Foreign Secretary will, I hope, have received a copy of the communiqué from the Maryland conference which was attended by one of his hon. Friends and me. Parliamentarians from Britain and Argentina and an observer from the Falklands Government met one another at that conference. I hope that the Foreign Secretary will respond soon, if not today, to the positive suggestions contained in the agreement arising from the Maryland conference.
At Maryland we said that progress towards an agreement between Britain and Argentina was not incompatible with respect for the wishes of the islanders. The Argentines put their names to that. They said that they would respect the wishes of the islanders. It emerged that when the Argentines talks about sovereignty they mean something very different from what we think they mean. They are more concerned with titular sovereignty. My hon. Friend the Member for Walsall, South (Mr. George) was at that conference. He will confirm that the Argentines are more concerned with titular sovereignty — with the flag, the colour on the map and with their pride, which we ought to understand. They believe that the transfer of sovereignty need not mean a change of life for the islanders.
Dante Caputo, the Argentine Foreign Minister, confirmed this in the "Brass Tacks" programme on 12 December 1984, when he said:
I believe that it is entirely acceptable that the inhabitants of the islands should decide forms of administration, of education, and forms of social organisations best suited to their interests.
More recently, in an interview in The Times, he spoke about the possibility of a dialogue rather than negotiations. That is not the hostile, intransigent picture of the Argentines that the Foreign Secretary has painted. Why, the Opposition ask, are the Government unwilling even to discuss options which might satisfy Argentine claims and continue to preserve the way of life of the islanders, without the need for an expensive fortress on the islands? Are we wise—there can be changes in this country as well as in Argentina — to let the islanders believe that the enormous costs, in every sense, of fortress Falklands can be or will be maintained for ever? Is this not, in reality, a cruel deception of the islanders?

Sir John Biggs-Davison: The hon. Gentleman said that there could be a change of Government in this country as well as in Argentina. Yes, indeed, and that is what worries me. There has been democratic government in Argentina and there has been dictatorship in Argentina. How can the hon. Gentleman or anybody else guarantee that there will not again be a relapse from a peace-loving democracy to an aggressive dictatorship?

Mr. Foulkes: I cannot guarantee that in Argentina. I cannot guarantee it in Spain either where we are discussing the future of Gibraltar. The faint possibility of Senor Alfonsin's Government being undermined increases if we are not seen to be having discussions with a democratically elected Government in Argentina.
The islanders, closer as they are to the situation than any of us, are more aware of the reality than are the Government, and they recognise that other options may need to be considered by them.
The United Kingdom Falkland Islands committee, in evidence to the Select Committee on Foreign Affairs, said that its "favoured solution" was a
variant of the constitutional position of Andorra".
So it is looking at other options. In the "Brass Tacks" programme, Alastair Cameron, the Falkland Islands Government representative in the United Kingdom who was with us in Maryland, said:
it was up to the British Government to provide a policy and to give it then to the islanders to discuss".
That is also what the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said as Under-Secretary of State at the time.
Incidentally, in the same programme representatives of the associations of parents of the Falklands dead confirmed that they would not consider it a betrayal of their sons if we were to talk to Argentina about the future of the islands.
However, instead of embarking on such a positive approach, certain actions of the Government have been interpreted as moving backwards rather than forwards—the Prime Minister's quasi-regal Christmas message to the islanders, the sudden granting of oil prospecting rights to Firstland Oil and Gas, and particularly the publicity surrounding the publication of the new draft constitution.
On that last matter, will the Under-Secretary of State confirm when he replies what the Prime Minister has already said in her letter to the leader of the Social Democratic party that that constitution gives no veto to the islanders over any future change in the status of the islands, and, in that matter, respecting the wishes and the interests of the islanders, this Parliament is and will remain sovereign?
To pretend that the new constitution is a great advance for democracy — a democracy which we fought to protect — on the islands is nonsense. Under the new constitution the islands remain firmly under colonial administration. I suppose that we must accept that it is appropriate to acknowledge that by restoring the title of governor.
Let us imagine that we are talking about another country, even a South American country. The president of that country would have power to preside over meetings of the Parliament; prorogue or dissolve the Parliament at any time under his own discretion; control the public service; approve the Parliament's standing orders; give assent to laws; declare a Bill to have been passed whether or not the Parliament approves; be the executive authority; summon the Cabinet, have sole control over the Cabinet's agenda; by-pass the obligation to consult the Cabinet; act against the Cabinet's advice; dispose of land; appoint judges; and be totally exempt from judicial review of his actions. That power would be relished by any dictator of any country. That is the power given under the new

constitution, which is supposed to be an advance in democracy, to the governor of the islands. To pretend that that is any real advance in democracy is nonsense.
The pretence at any real interest in the future of the individual islanders is shown up by the Government's approach to the economic development of the islands. It is not the rosy picture that the Foreign Secretary painted earlier. First, there are serious doubts, whatever the Foreign Secretarry may say, about the extent to which the airport will be available for civilian use. Will the Minister give us an assurance when he replies that the use of the airport for civilian purposes will not be impeded unnecessarily either by military use or by excessively high costs? In particular, why have the Government, as was revealed in a written reply to me, refused the subsidy for civilian use which the Select Committee on Foreign Affairs said would be necessary? Will that encourage the economic development of the islands?
Secondly, will the Minister confirm his answer to me of 30 January that there are no proposals for civilian flights, whatever the Foreign Secretary may have said in his introduction? The 1982 Shackleton report considered that to be of the highest priority. Will he explain why there are none?
Finally, will the Minister reply to the Select Committee's criticisms — not mine — that the Falkland Islands Development Corporation, which ought to be an "urgent response" to a "critical situation", is instead proceeding at what is described as a "funereal pace"? Why is that the case? Does that show concern for the development of the islands?
It is the Opposition's view that the intransigence of the Government, particularly the Prime Minister, on this issue is expensive, damaging to our international relations, against public opinion in the United Kingdom, distorts our defence commitment, and, above all, is against the long-term interest of the islanders.
We specifically call for a simultaneous declaration by Argentina of the formal ending of hostilities and a lifting by Britain of the protection zone—simultaneous, agreed in advance—which was accepted by the Prime Minister in January last year. We regret that the White Paper seems to have backtracked on that.
We urge the Government to seek a resumption of the talks interrupted at Berne and the restoration of diplomatic relations between Britain and Argentina.
I ask the Foreign Secretary, back hotfoot — or perhaps coldfoot — from the Soviet Union, why, since he is able, rightly, to discuss major issues, as he has done, with leaders of a country with a system very different from our own, he is so unable even to meet and discuss with a sister Western democracy which we now know Argentina is.
Above all, we remind the Government that the true interests of the islanders will not be served if they are for ever isolated from their nearest neighbours on mainland South America.

Sir Anthony Kershaw: I shall deal with some of the points that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has deployed with his usual eloquence. However, I fear that I may not be in entire agreement with all of them.
I have no doubt that the British claim to sovereignty over the Falklands is sound in law. It must be granted that


the various claims made before 1833 and the landings that took place present a somewhat confusing picture. The British occupation in 1833 was a legitimate and legally respectable action, which, having been followed by continuous occupation and administration, enthusiastically supported by the population, makes undeniably good our legal claim to sovereignty. The fact that the Argentines believe the opposite is irrelevant.

Mr. Foulkes: Why, therefore, is the first conclusion of the report that the Committee could not come to a decision on the respective claims of sovereignty? Is the hon. Gentleman distancing himself from the first and main conclusion of the report?

Sir Anthony Kershaw: The hon. Gentleman knows from his experience on the Committee that we are a democratic assembly. The Chairman does not necessarily endorse everything that goes on in that Committee. Nor does the Chairman have a vote, unless there is a tie, which there was not.
The Argentine invasion in no way alters the validity of their claim, but it did alter the feelings of the inhabitants, who were even more determined, especially after having seen the way in which the Argentine officers treated their troops, never to submit themselves to that kind of treatment. It would be intolerable for Britain to hand the islanders back to such a Government.
It is said that the new Argentine Government is so much better and more democratic than the old one that we should bolster their prestige and hand back the islanders to them. I see no reason whatever why we should do such a thing.
In the first place, I am not confident—any more than my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison)—that the democratic Government in the Argentine will survive for long. Inflation is running at 1,000 per cent per annum, resentful and revengeful armed forces are waiting in the wings, there is continued administrative incompetence, and a vast foreign debt has been recklessly incurred in a country that has a history of revolutions and coup d'etats that is remarkable even by South American standards. None of those things leads me to suppose that a long period of benign and peaceful domestic bliss lies ahead in the Argentine, whether or not we hand over our fellow citizens. Who knows what sort of regime will succeed it?
Secondly, the conduct of this democratic Government of the Argentine has been so unfriendly towards us that it is hard to see them behaving properly to our people in the Falklands. For example, they refuse to say that the war is over. They maintain trade and other barriers against us. They have rearmed, and still are rearming, with sophisticated weapons of aggression. They also maintain, with a vigour no less strident than that of the junta that they displaced, that they alone have the right to sovereignty over not only the Falklands but the dependencies as well — the last claim being historically and legally preposterous.
Finally, when, in Berne, we offered talks — having arranged in advance how we should deal with the sovereignty issue — the Argentines went back on the agreement as soon as they got to the table, proving yet again what unreliable interlocutors they continue to be. When the Argentines say that they want to negotiate sovereignty, they mean that they want to fix a date for the handover. Until they realise that that is not on offer, it is

pointless talking about lease-back or other modifications. If we talk about lease-back, we shall at once give away the sovereignty position. As the Argentine position is as I have described it, there is no point in holding other negotiations on other matters.
There is, of course, the problem that we have every year with the United Nations. There will be a resolution inviting us to negotiate face to face with the Argentines. The Argentines — in my opinion deceitfully — say that they are anxious to do that. But despite the misgivings voiced by my right hon. and learned Friend the Foreign Secretary this evening, I believe that there are some unilateral steps that could be valuable and would show the world that we are peaceful and co-operative in our intentions.

Mr. Maxwell-Hyslop: Before my hon. Friend leaves that point on sovereigny, will he share with us his thoughts on the following point? If even titular sovereignty were transferred and the Argentine then broke every other agreement and moved in its armed forces, we could not move our armed forces in without invading Argentine territory.

Sir Anthony Kershaw: My hon. Friend is perfectly right. The basis of negotiations for the future must lie in a certain trust, and I confess that I have not got that trust in the present Argentine Government or in any Government likely to succeed them.
There are individual things that we could give away without danger to ourselves or to the Falkland Islanders. I believe that there is room to negotiate about the protection zone and that we can co-operate over natural resources. Indeed, I was glad to hear my right hon. and learned Friend the Foreign Secretary suggest that something is being done in that regard, albeit cautiously. We can, and obviously will, reduce the garrison once the airport is in operation. Those things would certainly help our position vis-a-vis other South American countries.
I should like to add my congratulations about the airport. It is a remarkable feat of construction, and the work has been done far quicker and at less expense than at one time seemed possible. The Government do not differ fundamentally from the Select Committee about the direction in which we think that developments should go. Of course, we ask for more speed. It is always up to the Legislature to urge the Executive along that path, but we realise that the distance is great and that development opportunities are comparatively scant. The only really big new investment available is, I suppose, deep sea fishing, but at present neither the Government nor the Committee can quite see how that can be exploited. However, it should be done not only for political but for technical reasons, as soon as we have a little more information about it.
My hon. Friend the Member for Ryedale (Mr. Spence) has publicly suggested recently that some of the difficulties about enlargement of the EC in relation to Spain might be overcome by an accord with Spain about fishing. Perhaps that could be investigated.
A Select Committee should, and must, range far wider in discussion than a Goverment should or can do. In our paper we discuss several possibilities, of which I understand the Government do not approve. In the end, the Select Committee and everyone else must allow the facts to speak for themselves. The fact is that this country would


find it totally unacceptable to hand over its fellow citizens on the Falklands to any alien power, let alone the Argentine. The hon. Member for Carrick, Cumnock and Doon Valley suggested that this country wanted to do that, but he is absolutely wrong. All experience teaches us that that is quite impossible. Of course, one would not expect the Falklanders to agree to being handed over. But every time a Minister—whether Labour or Conservative—has even suggested that we might do that, he has been, to coin a phrase, happy to escape in his underwear. It was terrible that my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) should have been put up to make such suggestions. It was perfectly clear that neither this House nor the other House would agree to such a handover. The Falklands are, and will remain, very expensive, but there is a price to pay for liberty. It is, I trust, a price that this country will always be prepared to pay.

Dr. David Owen: In many ways the House is holding one of its more important debates and, in a sense, I regret the time and the way in which we are discussing the subject.
My first comments relate to the Select Committee's report. I do not believe that in 1977 the Government entered into negotiations with Argentina over the Falkland Islands because we doubted the British claim to sovereignty over those islands. I certainly challenge that assumption in the Select Committee's report. I know that there is a detailed and difficult legal tangle, but, having been deeply involved in those negotiations, I can say that I did not at any time feel that we did not have an honourable claim in international law to sovereignty over the Falkland Islands. It is still my belief that we have such a claim. With that point of agreement with the Government under my belt, I turn to a fundamental area of disagreement.
Both the House and the country will come to regret that in the aftermath of the successful retaking of the Falklands we did not use that opportunity of maximum international diplomatic strength to lay down the direction in which we felt it reasonable for the Falklands to go. I believe that as the months and years pass we will once again find ourselves in an untenable position in maintaining an absolutist affirmation that the Falkland Islands are a dependent territory of the United Kingdom. Thus, it is not just a question of legal interpretation and of what we believe. It is noteworthy that no Government have yet been prepared to test this issue in the international courts.
It is worth remembering that President Alfonsin has not only proved his democratic credentials in opposition and in government, but has solved the Beagle channel dispute with Chile, over which both countries nearly went to war in 1979. He held a national referendum on his solution, and 79 per cent. of the electorate voted for it. Only this morning, the Argentine Senate ratified the treaty. President Alfonsin is going to Washington tomorrow to persuade the Americans to have a better understanding of the Falklands problem. There is a grave danger, therefore, that over the succeeding years it will become at first an irritant and then a major cause of division between Britian and the United States, and Britain and our European allies,

about how we handled the Falklands. They simply do not understand why we will not grapple with the issue of sovereignty.
I make no secret of the fact that I would not transfer sovereignty to Argentina. I believe that there are penalties for armed aggression. Where one might have been prepared to contemplate such a solution before, it is not possible now. I must make it clear that when in office I was never prepared to contemplate it. I never accepted lease-back, and have great difficulty with it. The furthest that I was prepared to go was a sharing of sovereignty.
In those days, one of the options that I thought was most hopeful was that sovereignty over the uninhabited islands would be transferred to Argentina, and the inhabited islands—the greater space, I admit—would remain with Britain, with a shared economic unit covering all the islands, inhabited and uninhabited, and the territorial waters. That may not be possible to negotiate, although I still think that no Government should rule out a shared sovereignty solution. It has great potential. The Foreign Secretary stuck to a form of words which made it impossible to discover what he meant. He said that we were not prepared to discuss sovereignty, and then said that there were many other ways of solving the problem. It is fair enough to say that we will not discuss the transfer of sovereignty.
I do not favour the open agenda. That is a source of misunderstanding. There might not be a problem for the first year or two, but down the track are all the problems, anxieties and misapprehensions such as those which led to the invasion of the Falkland Islands. It would be clearer for the Government to say that transfer of sovereignty is out, but that they are prepared to discuss all the different options of shared sovereignty and of vesting sovereignty of the Falkland Islands in an international body.
The United Nations charter was invoked constantly in the House, by both sides, as the justification for our sending the task force and then for using it, and rightly so, but in the aftermath of victory the Government have not shown the same commitment to the UN charter. That charter instructs all member states to resolve their problems by peaceful negotiation. To refuse to use the charter in its entirety—to use it when it suits, but not to use it when it is not satisfactory — is an absolute recipe for international cynicism and despair. Having used the UN charter to our advantage, we must live with it in areas which we may find somewhat difficult.
Chapter 13 of the charter gives power for trusteeship. In particular, the charter sets out an alternative system for strategic trust territories. This was included because the United States Government, and especially the Defence Department, were unwilling to subject the Japanese occupied islands to a normal system of trusteeship, on the ground that those islands could be essential to US defence, and the United States therefore wanted an ultimate safeguard about what happened to them. Micronesia thus became the only strategic trust territory.
The main difference from the normal system was that it was laid down under article 82(3) that the functions of the United Nations in supervising such territories would in that case be exercised by the Security Council. That is vital, because it means that Britain, which would never be able to command an automatic majority in the General Assembly, would be able to use its veto in the Security Council. If we were to use article 82 for a strategic trust territory, we would be able to safeguard it.
The administration might well be vested in the Organisation of American States. I do not need to remind the right hon. and learned Gentleman that the OAS contains the United States and a number of Commonwealth countries. Within the United Nations system, regional organisations are often used. Of course, the problem that we face in any vesting of sovereignty in an international body is whether Argentina, under a different regime, would tear up all its obligations and simply invade. We must face the fact that that could happen again. I believe that Argentina will remain a democracy, but I cannot guarantee it. That is why I want a strategic trust territory if we are to vest sovereignty in an international body. Perhaps we need not use the charter, but could make an agreement with the Secretary General. I would still want the safeguard of the Security Council. Furthermore, I would want a peacekeeping safeguard so that Argentina could not under a different regime tear up its obligations.
We would need a purely token peacekeeping presence. It need not be a great size. We would not need a greater number of marines than were there before the invasion — perhaps fewer would suffice. The crucial point — this might satisfy the right hon. and learned Gentleman — is that no British Government will take seriously a peacekeeping force, even a token force, for preserving sovereignty vested in an international body unless there is a credible country associated with it. For us the absolute touchstone is that it should involve the United States — even if only a couple of marines are included — and a few Commonwealth countries: Argentina could be satisfied by the inclusion of other countries. Hon. Members may decide that they do not want that, but it is only one option. It would save face all round. No country would retain sovereignty. If the Government object to shared sovereignty, it is a solution.
Why do I believe that it is necessary to grapple with the issue of sovereignty? We must remember Antarctica. The real problem behind all this is the Antarctic treaty, involving the vast continent of Antarctica and its economic, commercial, strategic and social implications. This is one of the most precious treaties. I do not believe that it would be possible to negotiate it now. It has 31 signatories, but there are many anomalies. For example, Chile, Argentina and Britain are claiming the same territories. Let the House not forget the military force that went down to Southern Thule in 1976. Let us not forget the potential of Argentina to operate in areas where we would find it immensely difficult to do anything about it. Then let us consider the relationship between the Falklands and Antarctica.
I come to the documents which we are being asked to consider. The Government are making a great mistake in not keeping separate the constitutions of the Falklands Islands and South Georgia and the Sandwich Islands. They are constitutionally different. It is vital that we assert in the House that they are separate elements. The Government have made a great mistake in listening to the Falkland Islanders on this. Let them listen to the islanders on all aspects affecting security and negotiations with Argentina. I do not believe that we should make a move without consulting them as fully as possible. I think that I can fairly claim about the period when I was Foreign Secretary that neither I nor the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) ever made a move in negotiation without Kelpers knowing full well what we

were doing. But they have no right to tell us how we should handle the constitution of Sandwich and South Georgia.
The Government and the House will rue this. I hope that the Minister will tell us that the Government will think again about this. I, too, apologise for the fact that I may not be here for the reply to the debate. The Government are making a mistake. It is necessary to point out to Alfonsin and others in Argentina that there is a separation. As recently as June 1984 President Alfonsin said that his claim was not just to the Falklands, but to the South Georgia, the Antarctic peninsular and to the Scotia sea. Successive Governments have long wanted a constitutional separation. I know what the Foreign Office legal advice to Ministers would have been—to separate the constitutions.
The Government have bent to pressure from the Falkland Islanders on the issue. Let them have a named governor. The office of commissioner was never an attractive idea. Let them have some other things, but not this. Let us go back and separate the constitutions. I believe that that is the will of the House. By doing so the Government would be making it clear that we will not give any ground on our claim to Antarctica and that we are prepared to see the whole series of problems in the wider context of Antarctica. The treaty will come up for review in 1991. It is fragile, and major concessions will have to be made. There will have to be adjustments to the treaty over the next few years to ensure greater clarity. We cannot achieve that if we are in a state of war with Argentina.
A fortress Falklands would be economical and political nonsense. Nobody denies what must happen now. We have to spend money on an airfield, but to go on planning, in perpetuity, to keep a squadron of Phantoms on the Falkland Islands is nonsense. But that will have to happen if we continue armed hostilities with Argentina. The Argentines have only to scramble their aircraft every six months for us not to dare to take away our Phantoms. This is an extraordinary diversion of scarce and expensive resources. It means that we do not live in the real world. That is why our allies wonder what we are up to.
We understand the Prime Minister's problem. She was the first British Prime Minister to offer to give away the sovereignty of the Falkland Islands. She allowed her junior Ministers to give the impression to the Falkland Islanders and to the Argentine negotiators that she was prepared to contemplate lease-backing. The Government crossed the threshold of sovereignty.
I refuse to listen to lectures from the Prime Minister about the sovereignty of the Falkland Islands. I held the position against the transfer of the Falklands' sovereignty through difficult and different circumstances and through the military threat that we faced in 1977. The Prime Minister must now be got off the hook. I urge the Minister gradually to move her off the hook. I hope that he will say to her "By all means be categorical. You will not transfer sovereignty to the Argentine, but hold open your options on either vesting sovereignty in an international body, or ensuring an arrangement for shared sovereignty." Anything else is frankly dangerous and ludicrous, and would create considerable international tension.

Sir Peter Blaker: The right hon. Member for Plymouth, Devonport (Dr. Owen) is wrong in


saying that the Prime Minister was the first British Prime Minister to be prepared to cede sovereignty over the Falkland Islands to Argentina. I refer him to paragraph 29 of the Select Committee report which refers to the statement by Mr. Michael Stewart in 1967. The report states:
for the first time he stated formally to Argentina that they" — that is, the then British Government—
would be prepared to cede sovereignty over the Islands under certain conditions, provided that the wishes of the Islanders were respected.
I mention that only to put the record straight.
I was pleased at the robust line taken by my hon. Friend the Member for Stroud (Sir A. Kershaw). It was notably more robust than the line taken by the Select Committee. I regret, and I am surprised, that the Select Committee was unable to reach any categorical conclusion about sovereignty over the Falkland Islands. The reasons for this seem to have been twofold: first, their doubt whether in 1833 Captain Onslow succeeded in persuading the Argentines, who were then on the islands, to leave peacefully or by force; and, secondly, the fact that in the 19th century and, to some extent, in this century the Argentines have protested about the British presence on the islands.

Mr. Ivan Lawrence: That was not the reason. The Select Committee did not consider itself to be an appropriate court of international law and was therefore not prepared to inquire as if it were.

Sir Peter Blaker: It is a pity that the Select Committee did not say that. I am concerned about the impression that the Select Committee report made in Buenos Aires. I am sure that it will have made an even stronger impression there than it did here, after reports in the newspapers, that the Select Committee was in doubt about the question of sovereignty. If my hon. and learned Friend the Member for Burton (Mr. Lawrence) is right, the Committee should have made that clear in its report.

Mr. Foulkes: The Foreign Affairs Committee might not consider itself to be an international court or a body capable of making such judgments. Might the International Commission of Jurists be such a body? It came to the same conclusion as the Select Committee that valid claims about sovereignty can be made by both Britain and Argentina.

Sir Peter Blaker: With respect to that body, I am not as persuaded by its remarks, which I have not read, as by the remarks of the Government in their White Paper in response to the Select Committee report. Paragraph 3 of the White Paper states:
Britain's title is derived from early settlement, reinforced by formal claims in the name of the Crown and completed by open, continuous, effective and peaceful possession, occupation and administration of the Islands since 1833 … The exercise of sovereignty by the United Kingdom over the Falkland Islands has, furthermore, consistently been shown to accord with the wishes of the Islanders, expressed through their democratically elected representatives.
I am not an expert in international law, but over 30 years I have had some acquaintance with diplomatic matters. Those words certainly strike me as being consistent with the general line adopted by successive British Governments on questions of sovereignty when sovereignty is in dispute.
Did the Committee consider the effect of its report in Argentina? I cannot imagine that it has been helpful. Did it consider the wider implications of that remark about sovereignty?
I recall a conference that I attended in 1964 with my right hon. and learned Friend the Member for Hendon, South (Mr. Thomas) when he was Minister of State, Foreign and Commonwealth Office and I was his private secretary. The conference was with the Somalis, and with the Kenyans who were about to become independent. With us were Tom Mboya, Mr. Gichuru, Mr. Murumbi and other Kenyan Ministers. The question at issue was the future of the northern frontier district of Kenya which was claimed by Somalia on grounds of race and history.
My right hon. and learned Friend, who led our delegation, wisely asked the Kenyan Ministers to speak and to take a large part of the burden of putting the British case. They said that if one started to reopen borders and questions of sovereignty on the ground that the territory concerned had been acquired by force or because people had been making claims to that territory over past decades and centuries there would be no limit to what we would have to do to the international map. The Kenyan Ministers said "Look at the map of Africa. Every country has a territorial dispute with its neighbour. If you concede the Somali claim on the ground of history you will have to concede all sorts of claims in Africa's 50 or so countries because practically every country in Africa has a territorial claim."
The same can be said of South America. Argentina has a territorial dispute with almost all of its neighbours. Round the world territorial disputes are based upon history. I think of Vietnam and China, Vietnam and Cambodia, Thailand and Cambodia, Venezuela and Guyana. I mention a few disputes which occurred to me in five minutes' thought before I came into the Chamber. I think of the Soviet Union and Japan, Rumania and Hungary, Germany and Poland, India and China. Where do we stop?
The implication of the Select Committee report is that if there is doubt about our sovereignty over the Falkland Islands because of the factors to which it refers there must be doubt in many countries. I cannot believe that it wishes that implication to be drawn.

Mr. Peter Thomas: I well remember the meeting that we had in Rome 20 years ago. My right hon. Friend the Member for Blackpool, South (Sir P. Blaker) is right. We had to consider whether the Somali Government had any right to part of the northern frontier district of Kenya. It is quite true that a very strong line was taken by the Kenyan members of our delegation about how impossible it would be if one were to alter those lines which were drawn quite firmly by the colonial rulers in the past on the map of Africa. It is quite true that there are many similar barriers between countries which were drawn in that way.
This, surely, is different. The historical quality of the claims which are put forward by both Argentina and Britain are based on 1833, and the argument which has gone on and which was put before our predecessor Committee was so conflicting and so complicated that we as a Committee were unable to reach what we considered to be a categorical conclusion. It did not mean that we did not think that we had a case; it just meant that, having taken on the task — which we probably should not have


done— of trying to look into the historical background we were unable to reach a categorical conclusion. But we made it perfectly clear that by reason of the invasion in 1982 the whole situation had changed; that whatever the strength of the Argentine claim its invasion had changed the situation and its position had been damaged.

Sir Peter Blaker: I am very much obliged to my right hon. and learned Friend for that explanation, which elaborates on the point made by my hon. and learned Friend the Member for Burton (Mr. Lawrence). It is useful that that point, which relates to the role which the Committee took upon itself, has been made. It is important, bearing that in mind, that we make it clear in this debate what we really believe, because the record of this debate will no doubt be read in Buenos Aires. I believe that we should assert the fact that, since we have had, in the words of paragraph 3 of the Government's reply,
open, continuous effective and peaceful possession, occupation and administration … since 1983",
we have a valid claim to sovereignty. It is certainly a very much longer claim than that made by the Kenyan Ministers at the conference to which we were referring. We were talking then about a much shorter period than 150 years.
Referring to the question whether we should be prepared to discuss sovereignty with Argentina, I welcome the fact that the Committee said in paragraph 96 that what it had reported in the previous paragraph
does not mean that the United Kingdom Government should now agree to the inclusion of the 'sovereignty issue', as at present defined by Argentina, on the agenda for talks in the immediate future".
I would have wished the Committee to go further, because there are certain passages in the Committee's report which are in danger of misleading Argentina. I do not believe that we can possibly discuss sovereignty with Argentina in the foreseeable future because I do not think that the public of this country would tolerate it. I believe that if we started to discuss sovereignty with Argentina there would be uproar. There certainly would be in my constituency and, I suspect, in many other constituencies.

Mr. Foulkes: How does the right hon. Member explain the results of the two Gallup polls held at the end of last year which showed that the vast majority of the British people would be prepared for the Government to enter into discussions about sovereignty? Those polls represented the views of the people. I think that the right hon. Member is completely out of touch.

Sir Peter Blaker: We are not governed, fortunately, by Gallup poll. I think that the Gallup poll is wrong about what the reaction of the public would be if we started to discuss sovereignty with Argentina in any meaningful way.
The right hon. Member for Plymouth, Devonport (Dr. Owen) suggested that we should be prepared to contemplate shared sovereignty. I have some experience of shared sovereignty because I was responsible a few years ago for the New Hebrides. I have been concerned with some difficult diplomatic problems in the past 30 years, but that was worse than anything I have ever experienced. That involved only two countries sharing sovereignty. The right hon. Gentleman is suggesting, apparently, that the administration of the Falklands should be shared by the countries of the OAS. The mind boggles at the confusion that would result.

Dr. Owen: Eleven trustee states.

Sir Peter Blaker: The right hon. Gentleman is reinforcing my point.
One of the various points considered in the report is that since we were prepared to discuss sovereignty before 1982 we should be prepared to discuss it now. It is clear from what has been said already in the House that the war of 1982 changed all that. One of the things that it did — and I do not think that this has been sufficiently brought out — was to give the Falkland Islanders experience of Argentine rule. If they were reluctant to have sovereignty discussed before — and they were — they are triply reluctant now in view of that experience.
I support the point that my hon. Friend the Member for Stroud made about the relevance or otherwise of the fact that Argentina is now a democracy. Of course, we welcome that fact and hope that it will remain a democracy, but the record shows that in this century no democratically elected Government in Argentina has completed its term. I am not sure that that is absolutely correct—there may be exceptions—but the general rule has been that democracy has been of short duration.
The Argentine Foreign Minister was reported in The Times on 11 March to have made the point that the militarisation of the islands has made the Falklands a strategic target. I think that he has scored an own goal by that remark. One of the things that we have to bear in mind is that the Falklands are potentially of strategic imrortance in the context of Antarctica—a point to which the right hon. Member for Devonport referred. If Antarctica is important, I cannot understand why that should be an argument for our giving up sovereignty or sharing sovereignty or, indeed, for reducing our forces in the Falklands. If the Panama canal were to be closed everybody would suddenly realise that the Falklands were of strategic importance and wonder why they had not thought of it before.
The tone of the report is more apologetic and pessimistic than I would have wished. It is a pity that in paragraph 94 the Committee says:
the present situation, although understandable in the short term, can only offer an uncertain future for the Islands in the long term and … some kind of accommodation with Argentina is not only inevitable, in view of the cost of the present policy to the United Kingdom, but also desirable".
It goes on to elaborate on that point.
Again, one has to ask what the effect is on the Argentines if they read that sort of remark. They will read that and other remarks in paragraphs 96 and 98 of the report as showing that our resolve to retain sovereignty over the Falkland Islands is less than firm. People in Argentina will be reading into the general tone of this report an assumption on the part of the Committee that, even though we may not be prepared to discuss sovereignty now, we will be prepared to do so before long.
Is it not possible, if that is the conclusion that is drawn in Argentina, that it will make the Argentines less willing to discuss practical matters such as trade, shipping, flights, visits, financial services and perhaps joint exploitation of the fish and oil resources of the south Atlantic? They will be pushing us towards the point at which they believe we shall discuss sovereignty. It is possible that the more we appear to be apologetic and anxious about the future of the Falkland Islands, the less likely we are to get the Argentines to the table to discuss the practical matters.
Indeed, the report itself condemns that approach. Referring to the statement by Mr. Michael Stewart, paragraph 29 states:
There is little doubt that this early indication of the United Kingdom's willingness to consider the transfer of sovereignty both coloured subsequent discussions between the two governments and provided fertile soil in which Argentina's subsequent sense of grievance could grow.
I fear that that might be the immediate or long-term consequence if we continue to appear apologetic and doubtful about our position.
I believe that the British public are prepared to bear the cost of defending the Falklands — that cost will fall when the airfield is completed — and are prepared to continue to demonsrate the will to protect our position in the Falklands. That is in the interests of the Falkland Islanders. It corresponds to the will of the British public and is less likely to mislead Argentina.

Mr. Tom Clarke: The right hon. Member for Blackpool, South (Sir P. Blaker) spoke with the clarity that the House has come to expect, but his judgment was at fault. His finger is less on the pulse of the true feelings of the British people than, for example, my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) and, to be fair, the right hon. Member for Plymouth, Devonport (Dr. Owen). I do not believe that the British people will encourage the Government to continue with the type of intransigence that we have seen during industrial disputes and that runs contrary to some of the Government's own achievements abroad. The Government are entitled to claim achievements over settlements in Zimbabwe and Hong Kong. I regret that this evening we have not heard that kind of language.
Lord Carrington had considerable influence on the Prime Minister over the settlement in Zimbabwe. The Foreign and Commonwealth Secretary had the same influence over the Hong Kong agreement. That type of realistic and reasonable thinking is required in these circumstances but, so far, it has not been reflected in contributions by Conservative Members.
The Foreign Secretary referred in passing to the views and role of the United Nations. I believe that Parliament would wish to take on board much more firmly the genuine dedication to a peaceful solution that is in the minds of the United Nations and especially of Mr. Perez de Cuellar. We owe it to international diplomacy to stop talking in terms of the type of chauvinistic approach we have heard during this debate and to think reasonably of the type of settlement that can be achieved.
It was to be expected that a great deal would be said about sovereignty. We must consider another aspect in the context of these problems—our word, and the views of British Governments past and present. If we have a major change of mind, we are entitled, and expected, to offer a better explanation than has been given so far. The Franks report referred clearly to this matter. Under "The 'Memorandum of Understanding,'" paragraph 22 states:
in March 1967 the British Government for the first time stated formally to Argentina that they would be prepared to cede soverignty over the Islands under certain conditions, provided that the wishes of the Islanders were respected.
There is no reason to depart from that commitment — a commitment that was repeated by successive

Governments. The onus lies on the present Government to tell us why they appear to be going back on that commitment.
It is true that dramatic events took place in 1982, but we are entitled to ask why the forces went to the Falklands. They went not simply to fly the flag — to do so would be to take away seriously from the objectives that the House set at that time — but to provide long-term security, and that is the overriding influence that we should be considering during this debate.
How can we consider long-term security if we refuse to accept that there has been a genuine change by the Argentines, especially their present Government? That change should be met by a more sensitive response by the United Kingdom. It would be damaging to the Argentines, to the British and to the islanders themselves if the present intransigence prevailed and if we did not attempt to seek a secure relationship with our south Atlantic neighbours.
During the debate there has been a great deal of criticism of the present Government of the Argentine, but it must be said bluntly that things have changed. Galtieri is no longer in control; many of the generals have gone on trial; and the new President and Parliament are dealing with some challenging problems. The House should understand the way in which they are attempting to solve those problems so soon after the traumatic events of 1982. The new rulers of the Argentine have a distinguished record in fighting the previous regime to which we have rightly taken so much exception. The present rulers of the Argentine were bravely fighting that regime in a way that can stand comparison with many hon. Members. That point should be seriously considered.
There is a danger that our approach to these matters could offer succour to the hard-liners in the Argentine. That would be a great mistake. They would welcome intransigence as a springboard from which to mount their own chauvinistic ambitions, which have not disappeared and which should not be encouraged by the attitude and role that we adopt.
My hon. Friend the Member for Carrick, Cumnock and Doon Valley referred to the cost of fortress Falklands. I believe that the right hon. Member for Blackpool, South and the hon. Member for Stroud (Sir. A. Kershaw) seriously underestimated the deep feelings of the British people on this matter.
I do not believe, given our domestic problems and the demands made upon us, for example, in Northern Ireland — I do not attribute blame but the present unhappy conflict is a drain on our resources — that the British people will say that it is right to pay about £2 million a day to support 1,800 people.

Mr. Dalyell: £3 million.

Mr. Clarke: I accept the figure suggested by my hon. Friend, who is much better informed on these matters than I am. In a global sense, the British people will not accept that amount of expenditure without a more reasonable explanation about discussions on sovereignty and the future role of the Falkland Islands—islands 8,000 miles away.
The Foreign Secretary referred to strategic implications. He said that the suggestion that the Falkland Islands would become a NATO base were manifest nonsense, but so long as we have such a clear military commitment people will see it as a possibility and some even as a


danger. I do not believe that that is the kind of contribution to peace in the south Atlantic that most right hon. and hon. Members would wish to see.
I refer, as did other hon. Members, to Hong Kong. I accept that there is no positive and clear parallel, but there are matters of mutual interest and anxiety. The most important aspect of Hong Kong before the negotiations began was perhaps that the Prime Minister took a belligerent and hostile approach to a settlement. She was in due course persuaded. In addition, to her credit, she did still more. She prepared the people of Hong Kong for a reasonable settlement. Had she not done so, acceptance of those negotiations would have been much more difficult.
There is an opportunity for the Prime Minister and her colleagues to embark upon discussions with the people of the Falkland Islands. I am not certain that the Prime Minister's Christmas message was the kind of approach that would be helpful in reaching a constructive solution to the problem.
I have not had the opportunity to visit the Falklands as many hon. Members have been able to do. However, last year, I visited Belize and had the opportunity — I should say privilege—to speak to some of our officers and men who were involved in the Falklands exercise. My admiration for them is, I know, shared by other hon. Members. They attempted to relate to me their experiences and views on the loss of life on our side and on the Argentine side.
I took the view then, as I do strongly now in the debate, that it would be one of the greatest tragedies in our history if we had a repetition of that kind of exercise, which many people believe — my hon. Friend the Member for Linlithgow (Mr. Dalyell) is not alone in this view — could have been avoided by a diplomatic settlement. I hope that there will be no repetition of that exercise and that loss of life.
The United Nations will take an increasing role in our discussions on these matters. It will say to us that it is not beyond the wit of modern diplomacy to reach a sensible, reasonable solution to the problem. It is that solution which I commend to the House for acceptance.

Mr. Robert Harvey: There is much in the Government's response to the Select Committee's report on the Falklands that is sound common sense. The White Paper makes the point that, following the return of British administration in June 1982, the Government faced a completely new situation — a war had been fought and negotiations could not revert directly to where they left off before the war. That point has been made again by my hon. Friends this evening. It has been far too little understood by the Argentines, even though we recognise that the constitutionally elected Government of President Alfonsin bears no responsibility for the acts of their unconstitutional predecessor.
The Government's underlining of the Falklanders' right to determine their own future is also welcome. The Government's reply is correct in drawing attention to the Argentine's continuing refusal to announce a cessation of hostilities which would open the way to the ending of the trade embargo and of the protection zone around the islands.
All the same, hon. Members must feel a sense of disappointment at the absolute deadlock that seems to have persisted since the end of the Falklands war.
There are two sources of concern on the British side. The first, and least, although it was mentioned by the right hon. Member for Plymouth, Devonport (Dr. Owen), is the danger that Britain's allies in the world may lose sympathy with our position. Secondly, and more important, Britain has a duty to the people of the Falklands to provide them with a stable and foreseeable future.
In the absence of any negotiations, or even speaking terms between the two countries, the Falklanders have only our present profound sense of commitment to them on which to rely. That commitment goes deep, but no British Government can bind the hands of their successors. No Government can promise that, irrespective of the costs, we shall continue to provide necessary military protection of the islands ad infinitum. The Falklanders are realists and do not believe that the present commitment is for ever. It will endure for as long as we can afford it, no other way forward can be discerned and Argentina continues to be unreasonable.
However, should Argentina become more reasonable, it will be the historic duty of the British Government to seize the opportunity and not let it slip in case one day, heaven forbid, a less responsible Government should come to power and negotiate a much less favourable deal to make savings, for example, on their defence budget.
That begs the question of how unreasonable the Argentines are being at present. As I said, their refusal to call a formal end to hostilities is unreasonable, but perhaps the problem could be resolved by a simultaneous ending of the exclusion zone at the same time. This who-goes-first argument should not stand in the way of talks.
The central problem to the whole issue is what should or should not be on the agenda, which scuppered the last talks in Berne. It was agreed there that the Argentines could mention the word "sovereignty" provided that we said at once that we were not prepared to discuss it. The talks were then turned to other matters, and the Argentines withdrew in a huff when we stood by that agreement. Clearly, they were being unreasonable then.
In discussions that hon. Members on both sides of the House have had with Argentine parliamentarians, it seemed that we could detect an attitude of greater reasonableness, although whether that extended to their Government one could not say. They seemed prepared to consider a suggestion by which official negotiations would deal with the return to peaceful relations, while unofficial talks, for example, between retired but respected diplomats on both sides, would simultaneously consider not the issue of sovereignty but that of the future of the islands.
From the British point of view, that would give away nothing, even less than the Berne formula did. Obviously, these views of parliamentarians are not official views, but I am sure that the Government are considering all suggestions carefully as a way of getting talks started and creating a friendlier climate without prejudice on either side.
It would be churlish of us not to recognise that the democratic successes of the dictator Galtieri cannot be expected to have absolutely nothing to show in return for the normalisation of relations with Britain. No Argentine Government could go back to their people and say, "We shall mend fences with Britain, but we have agreed not even to raise the issue of the future of the islands".
Britain has won a war. Let us not detract from that victory by appearing to be at all insensitive. Our


courageous fighting men fought and died to defend the principle that territorial disputes must not be resolved through the use of force and that the Falklanders remain British for as long as the majority of their inhabitants so wish.
They did not fight and die to defend the principle that we are unwilling ever to talk about the future of the Falklands. Their sacrifice will be debased if we absolutely rule out the chance of getting a secure and permanent settlement for the Falklanders now. We would give nothing away by saying that we were prepared to discuss the future of the Falklands, just as over Gibraltar we have given nothing away by saying explicitly that we are prepared to discuss sovereignty with Spain. We need not accept a single proposal that they make, but it is just conceivable that we might discover in such talks an arrangement that might be acceptable as a long-term solution to the people of the Falklands, as of Gibraltar.
I have a hunch that, in the Falklands at least, Argentina might be prepared to offer the sort of guarantee that would ensure the continuation of British administration and the preservation of the Falklanders' way of life. Of course, that would have to be acceptable to the people of the Falklands. Of course, trust and perhaps third-party guarantees would have to underwrite such a deal—the sort of trust that allowed reconciliation between Germany and its neighbours after the second world war, and the sort of trust that allowed Israel to reach peace with Egypt after not one but three wars had been launched upon it by that country.
To fight in defence of principle requires courage and statesmanship of the highest order, and the Government have shown it. To achieve a secure and binding peace that will permanently guarantee the Falklanders' way of life will require no less of both, but I am confident that a Government who have achieved the historic settlement in Hong Kong and the opening of the gates of Gibraltar can and will rise to the occasion.

Mr. Bruce George: I am delighted to be called to speak in the debate, although I hope that it will not affect my chances of being called to speak in tomorrow's important debate on the west midlands. It is a pleasure to follow the hon. Member for Clwyd, South-West (Mr. Harvey), who spoke courageously. One suspects that in the massed ranks of Conservative Members his voice, although not a lone one, does not necessarily reflect the ethos of his party in the light of what we have heard this evening. Remembering the famous saying about the Hapsburgs, may I say that five, 10 or 15 years from now I do not wish Britain to be forced down the path down which it was forced three years ago, fortunately successfully. We may not be as fortunate in the future.
This debate is important not simply because of the topic that we are discussing. I hope that people will not regard the vast empty spaces in the Chamber this evening as representing indifference. The debate contrasts sharply with the excitement and enthusiasm during that Saturday morning a few years ago, which has left an indelible mark on my mind. Never again do I wish to go through what we experienced on that occasion. Our lot was an easy one compared with that of the British troops, who were forced

to accept the consequences of the failure of Government policy and the failure of Parliament to create an environment in which discussions with Argentina could have led somewhere and could have precluded the fact that more than 250 British citizens and many more Argentine citizens paid the price for that failure on both sides.
This is an important debate from the standpoint of the House of Commons. Select Committees, which I support totally — I am an active member of the Select Committee on Defence — are not debating clubs that spend months producing reports which end up in pigeon holes. There must be a bridge between what happens in Select Committees and what happens in the Chamber. Far too few Select Committee reports make it as far as the Chamber. I do not suggest that they are not read or debated in one form or another, but only a handful of reports have been debated on the Floor of the House. It is important that the link is maintained to show that the work done by Select Committees has a significance greater than simply a means of whiling away the time, after which their reports are conveniently forgotten. This report does not deserve to be forgotten.
The right hon. Member for Blackpool, South (Sir P. Blaker) has the mistaken view that the Foreign Affairs Committee is a branch of the Foreign Office, perhaps its public relations arm. He thinks that the principal task of the Foreign Affairs Committee is to advance the negotiating position of the Foreign Office. The Committee should not be expected to perform that task. It has not done so in the past. It has produced many challenging reports, reports that have almost invariably been a finger in the eye of the Foreign Office and the Government, but that is no reason why the Foreign Affairs Committee should be deprecated. It produced excellent reports on Canada, Central America and the Caribbean, Gibraltar and the aftermath of what happened in Afghanistan. Many of its reports ignored the prevailing view in the Foreign Office and have been vital because they have done that. It has stimulated thought and has shown that it does not have to be a mirror image of the Government's view. I commend the Foreign Affairs Committee and its Chairman for what has been done.
However, when I listened to the Chairman of the Foreign Affairs Committee, I thought that it was the Chairman of the Select Committee on Transport who was making the speech, such was the gulf between his speech and what was contained in the report. To advance the view that he as the Chairman has no vote is to show that his Committee may be unique among Select Committees. In our Committee, the Chairman not only participates in the debates but votes.
In the Foreign Affairs Select Committee report, I see that no vote was cast against paragraph 22. I am not arguing the case for Argentina, but it has a solid claim. Its claim is more spurious than ours. Ours may have some validity, but we have not put it to the test of international jurisdiction. Surely the answer to the rival sovereignty claims is what is suggested in paragraph 22, that neither side has an unchallenged claim to sovereignty of the Falkland Islands. I commend the courage of the Foreign Affairs Committee in advancing that view.
I have visited the Falklands. I just wish that more Argentine politicians had visited the Falkland Islands, which in the past I have called the diplomatic equivalent to a cold shower, as their enthusiasm might have abated somewhat if they had. However, although we may dismiss


the validity of their claim, we have failed to understand that, in psychological terms, the Falklands or the Malvinas, as they would call it, have an importance way in excess of the economic, diplomatic or political value. Argentina is a country with enormous potential, but unfortunately it has failed dismally both economically and politically, and in almost every respect. To an Argentine, the reason for this failure is their failure to have reacquired the islands off their coast.
One shudders to think what would happen if ever the Argentines had control of the islands and nothing changed. What then would they blame for their miserable failure as a nation? We must always remember that if we pursue our "Fortress Falklands"' policy in perpetuity, perhaps not under this Government or the next, but at some time there will be another attempt to secure control of the Falkland Islands.
I am certain that the democratic Government of President Alfonsin has no desire to retake the islands. However, having read the report of Dr. Paul Rogers and magazines such as Jane's Defence Review I am aware that there is a growing capability in Argentina. If the capability were matched by the will, the situation would be frightening.
Argentines argue, with some validity, that the impressive acquisition of weaponry is merely the receipt of equipment that was ordered by the military Government. The civilian Government are seeking buyers for some of the equipment and the size of the armed forces has been reduced. There has been a reorganisation and some units and regiments have been disbanded, but it is still a capable force. Smaller forces can be more capable than their larger predecessors.
Maintaining the islands as British for ever will be a heavy drain on our resources. I am a member of the Defence Select Committee, but it is clear from published evidence that there is no way in which the Government will be able to meet their military commitments on presently available resources. There are whispers in the press and people are using Kremlinology, and I suspect that our amphibious capability will be on the list for the chop. The fact that we are considering that capability is a clear sign of the problems that the Government have got into on defence spending. The military, political and diplomatic costs of fortress Falklands are high. A series of pressures should make us consider some form of settlement some time in the future.
The pressures on Argentina are also great. Argentines must realise that they failed to achieve their objectives militarily and that they will not get in peacetime what they failed to secure by military means unless they are prepared to compromise. It is all very well to point the finger at the Prime Minister — rightly — for her obduracy, but the Argentine Government do not have much flexibility either. The Argentine President has more problems with his public opinion that does a British Prime Minister.
Neither side has an interest in developing an arms race in the south Atlantic. Both of us should be diverting resources to things other than maintaining a fruitless and possibly disastrous arms race. It is in the interests of the islanders, both Governments, both peoples and the world community that we get away from the conflict and down to the negotiating table. Neither side will get everything that it wants, but that is the essence of diplomacy. Both sides give but both gain.
I am not arguing for a lease-back arrangement. I have examined 20 possible constitutional solutions. Many might not advance any cause, but somewhere lies a possibility of a settlement. I hope that the report, today's debate and negotiations between politicians, publicly and privately, will somehow help to resolve the crisis. We avoided a crisis three years ago, but if we are not prepared to be diplomatic we shall be in far greater difficulty. The House must try to avoid that.

Mr. Bowen Wells: In my experience, it is quite often at the end of a debate that we have some of the wisest and most thoughtful words in hon. Members' speeches. The speech by the hon. Member for Walsall, South (Mr. George) was one of those, and, indeed, that of my hon. Friend the Member for Clwyd, South-West (Mr. Harvey) was another.
The sense of the report of the Select Committee on Foreign Affairs and, indeed, the sense of the debate as it concludes is that we need to seek a way forward that will require compromise. I was pleased to note the advice that the hon. Member for Walsall, South gave to the Argentine Government. Compromise on their part will be needed.
It is wrong to assume that negotiations by President Alfonsin's Government with our country are seen by him to be likely to produce a result that will benefit him within Argentine political circles. It is a false argument to say that not to negotiate with him is to undermine him. If President Alfonsin, the first democratically elected president in Argentina for some time, and certainly the first non-military president for some time, returns with anything other than full sovereignty over the Falkland Islands or the Malvinas, as the Argentines call them, the political support that he enjoys in Argentina will be undermined. That is something that informs us about Argentina's actions towards Britain on negotiations. It explains why the Argentines have refused to concede that hostilities are at an end, which would facilitate the possibility of the British Government speaking to them about the whole issue of the Falkland Islands. Indeed, I believe that it explains their conduct in Berne, in Switzerland.
The Select Committee on Foreign Affairs, taking evidence for its report in pursuit of the facts, visited the United Nations and went around the ambassadors there, including the ambassador for Argentina. That was three months before the Berne talks in Switzerland. The ambassador gave us to understand that an open agenda, which included sovereignty, but which the Argentines would not expect to discuss, would be the way in which other issues could be discussed. Thus the two countries could begin to re-establish that essential trust which could bring about the opening of discussions on issues on which we could agree, and then we could move on to more difficult subjects. That is what the ambassador gave the Select Committee to understand, and that is what was reported to Ministers in the Government. Why did Ministers abort that opportunity to bring about negotiations? We can only speculate, but I suggest that it is because the President of Argentina is sufficiently insecure that he cannot bring back anything other than a total handover of sovereignty to Argentina. I believe, as Opposition Members have said, that Argentine public opinion would not tolerate anything else.
If that is the background, we are faced with an extremely difficult position because the Argentine cannot


make any compromise. The compromise that the Argentines must make is that they must realise that, by invading the Falkland Islands, they have forgone the opportunity ever in our lifetime or in the foreseeable future of being able to take over the sovereignty of those islands. That action offended against the United Nations charter in every way and, as my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) said, was carried out in pursuit of the principle that a country may not try to settle its arguments on territorial and boundary disputes by taking the law into its own hands and making a military attack. For a member of the Security Council such as Britain to agree to that would be to unleash on the whole world a variety of territorial disputes that would lead to untold deaths and terrible disputes continuing throughout our lives. It would undermine the principle of the United Nations charter. That is what Britain did to resecure its territory in the Falkland Islands. That is the principle we supported, that our men died for and that the United Nations, almost unanimously, agreed to support.
May I remind the House that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) throughout the whole of the Falklands Islands crisis—we have to consider this point in the light of his remarks today—consistently opposed in the House the despatch of the task force in defence of that principle.

Mr. Foulkes: Will the hon. Gentleman give way?

Mr. Wells: I shall give way in a minute. If the hon. Gentleman would not have despatched the task force to defend that principle, he is saying that he agreed with the claims of Argentina and would have handed over the islands to Argentina in any event. Therefore, his arguments must be set in that context.

Mr. Foulkes: I would ask the hon. Gentleman to accept — he knows me well — that I did not concede Argentina's claim. I thought that we should try to achieve a settlement by other than military means. May I also point out that on all those occasions I was speaking as a Back Bencher? Today I have spoken on behalf of the Opposition. That is a clear and important difference.

Mr. Wells: Of course I accept that difference, but the hon. Gentleman is a very persuasive member of his own Front Bench. I do not believe that we can absolve him from his own views on these matters by reason of his assumption of his great position, upon which I compliment and congratulate him. I am glad to see him in it. However, on this matter he and I must disagree, as we have always disagreed. Fortunately, hon. Members can disagree but retain great respect and friendship for those with whom they disagree.
I must record my disagreement, and also that of my colleagues on the Select Committee on Foreign Affairs, with the Foreign Office about the creation of a fisheries protection zone round the Falkland Islands. Permission ought to be given only to those who are licensed to fish in that zone not only to conserve the stocks of fish so that they do not become totally exhausted but also because it is the most obvious source of income for the Falkland Islanders other than the traditional sheepmeat and wool. Without this additional prop to the economy, I do not believe that it will be possible to ensure that the Falkland

Islanders can look forward to an economically stable and long-term future. It is their long-term future that we have to consider.
As the hon. Members for Walsall, South and for Clwyd, South-West said, the future of the Falkland Islanders and therefore their interests, which are not necessarily the same as their wishes, must lie in the conclusion of an agreement between themselves and this country and the South American mainland, namely, Argentina. Without such an agreement they will not attract the economic investment that is necessary to ensure that they have a long-term future. A means has to be found of ensuring that long-term solution.
Argentina will have to make compromises. They cannot expect sovereignty. We should not give the impression to Argentina that they ought to have sovereignty. It will be recalled that time and again the Government were accused in the House that because they explored lease-back before the invasion they gave the impression to Argentina that Britain would hand over to Argentina sovereignty of the islands and of the people. That mistake must not be made again. I appeal for a compromise and for an approach by Argentina to this country that shows that they are willing to try to re-establish the trust that is necessary in order to bring about the compromise solution that this country has shown that it is willing to make in other very difficult circumstances — in Zimbabwe, in Hong Kong, in Gibraltar and, indeed, at Fontainebleau in relation to the European Community. There is the will to compromise in Britain, provided that it can be done in the interests of the Falkland Islanders and in pursuit of the vital principle that no nation should pursue its territorial ambitions by military force.

Mr. Tam Dalyell: The Minister should have time to answer the debate. Therefore, in three minutes I shall ask three questions.
The first is of the past. Is it true that the distinguished Conservative historian, Lord Blake, the Provost of Queen's college, Oxford has any grounds for referring in his most recent book to a Cabinet discussion in which it was decided that up to 1,000 British deaths would be acceptable during the conflict?

Mr. Robert Rhodes James: rose—

Mr. Dalyell: No, not for a three-minute speech. Secondly, in the light of discussion on the airport, has account been taken of the fact that Argentina now has possession from Matra in France of the Durandel anti-runway bombs which can create havoc from low altitudes, making holes 2 m deep and 5 m in diameter, which could put out of action temporarily the Mount Pleasant runway and, therefore, the Phantom cover? What assessment has been made of the whole range of Argentine arms—the Nesher Israeli adapted Mirage 3s or the Mirage 5s, and the many armaments to which I have previously referred in the House?
Thirdly, I am dismayed at the attitude of many Conservative Members. All right, the Falkland Islanders have rights, but they do not have the right to keep a sizeable portion of the British Navy down there for the lifetime of the youngest among us. If they want, they have the right to be British, and that means coming to Britain.
Will the Government look at how the Scots and Welsh communities get on in Southern Patagonia? After all, in


the words of Sir Richard Evans, our excellent ambassador in Peking, the legacies of history should be resolved by peaceful means. The Scots communities and Mr. Tuan McCafferty and the Welsh communities and Mr. Pablo Llewelyn get on very nicely. Not a finger was laid on them during the conflict. The whole Anglo-Argentine community must be considered in future. The truth of the matter is that, although Alfonsin will not start a conflict, he is pretty vulnerable. It is an embryo democracy, and surely it is in the British national interest to help him.

Mr. Austin Mitchell: rose—

Mr. Robin Maxwell-Hyslop: rose—

Mr. Dalyell: I give way to my hon. Friend.

Mr. Speaker: Mr. Maxwell-Hyslop.

Mr. Dalyell: My God.

Mr. Robin Maxwell-Hyslop: The white coat can go away if he wants to. There are questions which will not go away. One is about sovereignty. Britain could not realistically use armed forces today merely because Argentina was in breach of a treaty. If sovereignty were ever conceded to Argentina as part of a general settlement and an Argentine Government in the future then tore up that settlement but were in possession of sovereignty, we could not move armed forces into the Falklands without invading Argentine territory. That is a fact which will not go away.
Secondly, among the events which have happened since 1982, whether the hon. Gentleman in the white coat likes it or not, is that people throughout the British Commonwealth, including in the Falklands, have seen what happens when leased territory comes to the end of its lease. The leased territories in Hong Kong are coming to the end of their lease, and that is a fact which is discussed in the Falklands. The significance of that is not lost on the Falkland Islanders.
Then again the right to be protected by the state of which one is a citizen is the most elemental right. It is not attenuated by distance. The inhabitants of the Shetland Islands are not less entitled to defence by the forces of the Crown than the inhabitants of Luton because they are further from London. Similarly, the inhabitants of the Falkland Islands are not less entitled to defence by the forces of the Crown because they are further from London than the inhabitants of the Shetland Islands. I have been to the Falklands since the conflict and I know that the Falkland Islanders will say that themselves.
Those who wish to make their own assessment of opinion on the Falkland Islands should bear in mind that Stanley is no more the Falklands than London is Britain. The history of Argentina is a history of chaos interrupted by very occasioal and brief periods of elected government. The standard picture of Argentine history is one of conflict —sometimes between the military Government and their citizens, and very often between the citizens themselves.
The present elected Government of Argentina may, or may not, last longer than the Government of Dr. Illia, following the military deposition of Peron, but morally we cannot assume for our own convenience and for the saving of defence Estimates that the present manifestation of politics in Argentina is even probably going to last. Judging by the history of Argentina to date, we have no reason to make such an assumption.

Mr. Foulkes: Governments here can change too.

Mr. Maxwell-Hyslop: I am not sure whether the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), who is sitting on the Opposition Front Bench, is speaking as a Front Bench spokesman, but I remind him that our established pattern is that we have a democratic Government, even if Governments change after elections. That is not the established pattern in Argentina. Argentina has had 36 presidents in the past 100 years. It is no good the hon. Gentleman shaking his head. Does he disagree with that statement of demonstrable fact? How many of those presidents have been elected? Argentina has had fewer than Bolivia, but that is not a very great achievement.
Anyone who talks about the transfer of sovereignty or titular sovereignty is condemning the Falklands Islands to that. Once Argentina has titular sovereignty over the Falkland Islands, the fate of the Falkland Islanders will be left to happenchance. If we want to get away from the arguments about sovereignty, we must look to mutual interest. There are immense resources of minerals in Antarctica. At present prices they may be uneconomic to mine, but that will not always be so. As Arab supplies of oil and European supplies of coal are worked out—as one day they will be — the economic viability of harvesting Antarctica will become more real. —[Interruption.] If the white coat would be quiet, he would extend the same courtesy to other hon. Members as they extended to him.
In the historic carve up of Antarctica, Britain, Chile and Argentina participated in overlapping claims from which much of the rest of South America, including Brazil, was excluded. I should have thought that the way forward in terms of mutual interest would be to have new negotiations, not on the sovereignty of the Falklands, but on the sovereignty of Antarctica as a whole. In those negotiations we should offer to put into the pool our claim to Antarctica so long as Brazil and other South American countries had a share, divorced from historic claims. That might put an end to the hostility between Argentina and Chile and the feeling of Brazil that she was excluded. That is the way that we should follow to change the focus from sovereignty of the Falkland Islands, which is, and must remain, ours as a safeguard to the British population in those British islands.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Renton): I should like to thank all those on both sides of the House who have made such constructive and thoughtful contributions to this important debate. I should particularly like to thank my hon. Friend the Member for Stroud (Sir A. Kershaw) and the members of his Select Committee, whose sound and thorough work has offered such a good basis for our discussions. My hon. Friend himself made a useful speech. In the words of my right hon. Friend the Member for Blackpool, South (Sir P. Blaker), it was a robust speech. My hon. Friend the Member for Stroud has sent me his apologies because he could not be here for the reply to the debate.
I assure the hon. Member for Walsall, South (Mr. George), who is not in his place at the moment, that none of us at the Foreign and Commonwealth Office ever thinks of the Foreign Affairs Committee as an arm of the FCO


—quite the opposite. I am sure that my right hon. Friend the Member for Blackpool, South, as a former Minister at the Foreign and Commonwealth Office, would himself never think of the Select Committee in those terms.
Without further preamble, and not having much time, I should like to answer some of the points that have been raised in the debate. In his opening remarks my right hon. and learned Friend made it abundantly plain that we wish to normalise our commercial relations with Argentina, but that we are not prepared to discuss the issue of sovereignty. Many hon. Members referred to this issue, including the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), the right hon. Member for Plymouth, Devonport (Dr. Owen) and my right hon. Friend the Member for Blackpool, South.
The hon. Member for Carrick, Cumnock and Doon Valley never made any mention of the right of the Falkland Islanders to self-determination, although he said that we should put the matter on the table. I remind him of these words:
However, I hope that the whole House supports the right of the Falkland Islanders to self-determination and to live in peace under a Government of their own choosing, as they have been able to do for the past 150 years."—[Official Report, 7 April 1982; Vol. 21, c. 965.]
Those were not the words of the Prime Minister or of the Foreign Secretary. They were the words of the right hon. Member for Leeds, East (Mr. Healey) in the House on 7 April 1982, not three years ago. What has changed that to make the hon. Member for Carrick, Cumnock and Doon Valley now feel so strongly that without considering the right of the islanders to self-determination we should put the issue of sovereignty on the table to be discussed?
That is particularly important because we all know that when the Argentines talk about sovereignty they mean the transfer of sovereignty. President Alfonsin made that abundantly plain in his speeches at the United Nations Assembly. When he talked about lease-back, he made it clear that he was talking in terms of three to five years before the ownership of the islands reverted to Argentina.
As my hon. Friend the Member for Hertford and Stortford (Mr. Wells) and my right hon. and learned Friend the Member for Hendon, South (Mr. Thomas) said, it is as if the Opposition believe that the events of 1982 can be totally forgotten. They cannot be forgotten. Least of all can they be forgotten by the islanders themselves.
The hon. Member for Carrick, Cumnock and Doon Valley suggested that at the Maryland conference islanders gave the impression that they were willing to discuss the future ownership of the islands. In all the discussions that we regularly have with the islanders' elected councillors, we see no sign of that whatsoever.
Mr. J. Cheek, a Falkland Islands councillor, in the fourth committee of the United Nations General Assembly in October last year, said:
Members may question what is the percentage of islanders who wish the Falklands to remain a dependent territory of Britain. I can assure members that islanders are almost unanimous in this belief.
The right hon. Member for Devonport talked about the Beagle channel and the approval by the Argentine Senate today. He said that it showed that President Alfonsin is now more flexible. We welcome any reduction in tension in the south-west Atlantic. Of course we are pleased about the agreement between Chile and Argentina. However, no

invasion was required by Argentina of Chile to obtain that agreement. Instead, a referendum was held. President Alfonsin held a referendum of his own people and there was an 80 per cent. vote in favour. Why does he not show any sensitivity about the rights and wishes of the islanders?
We have been privileged tonight to hear speeches by all three of the hon. Members who were present at the Maryland conference—the hon. Member for Carrick, Cumnock and Doon Valley, my hon. Friend the Member for Clwyd, South-West (Mr. Harvey) and the hon. Member for Walsall, South. All hon. Members will be grateful to them for their reports of the proceedings at
Such contacts between parliamentarians can usefully complement official exchanges through the protecting powers, but some of the references to the Maryland communiqué are starry eyed. It would be wrong for the House to go away with the idea that the communiqué represents a breakthrough. The reference to respecting the wishes of the Falkland Islanders comes at the end of a paragraph listing various means of transferring sovereignty.
The document reiterates the Argentine insistence of a linkage between the normalisation of bilateral relations — which we want—and discussion about sovereignty. Indeed, Argentine participants at the conference have subsequently emphasised that they insisted at all times on Argentine sovereignty.
The hon. Member for Carrick, Cumnock and Doon Valley, the right hon. Member for Devonport, the hon. Member for Walsall, South and the hon. Member for Monklands, West (Mr. Clarke) referred to the cost of the Falklands. The overwhelming cost has been that of recovering the islands, of reconstruction and of the construction of Mount Pleasant airport. Once the airport is completed expenditure will come down sharply, and when it is fully operational it should be possible to reduce the size of the forces permanently stationed on the island.
In any event, it is surely wrong, however tempting, to put a cash value on the principles that are at stake. The price of liberty and self-determination comes dear, and when hon. Members of the Opposition speak, as they do constantly, of fortress Falklands, I must put it to them that this is a misnomer. It is no more a fortress Falklands policy than it is a fortress Britain policy. It is the right of the Falkland Islanders to be defended from the threat of attack, and it is our duty to defend them. We are keeping there the minimum force that is necessary for the purpose of defence. Obviously, the policy of defending the Falkland Islands was not specifically of our choice. It was forced upon us by the 1982 invasion.
I hope that the hon. Member for Carrick, Cumnock and Doon Valley will allow me to write and give him the answers to the various questions that he asked me about the airport, since they are somewhat detailed and time is short.
To the hon. Member for Linlithgow (Mr. Dalyell), who asked me three questions, I would say, first, that I do not think that Lord Blake has written a new book for a long time. Secondly, it really is not appropriate for us to go publicly into our assessment of the military strength of Argentina. However, we note, as he will have noted, that Argentina, from spending 6 per cent. of its gross domestic


product on defence military purposes in 1983, has reduced this to 4 per cent. in 1984 and an estimated 3·2 per cent. in 1985.
I should like to come back to the twin themes of our Falklands policy as described by my right hon. and learned Friend in his opening remarks. Of course, I agree with the comments made by, for example, my hon. Friend the Member for Clwyd, South-West on the need now to search for solutions. In this respect I agree with the hon. member for Linlithgow, who talked about our long-standing friendship with Argentina. That is of course true. Our relations and friendship with Argentina went back a long way, and throughout the 19th century we had an honourable financial connection with that country. We never wanted it otherwise, and it is unnatural that it should be otherwise. Sadly, it was Argentina which so rudely destroyed that friendship in April 1982.
How do we start rebuilding that friendship? I must put it to the House that it is we who have been making the patient efforts to promote normality and rebuild confidence in our relations. It is we who from the first have made the running in seeking better bilateral relations. It is we who have looked to the democratically elected Argentine Government to show a greater spirit of realism and flexibility in their response than their predecessors did. It is we who have been trying constantly to open the window and it is the Argentines who so far have always slammed it shut again.
We regret that they are not yet ready to accept that, while the issue of sovereignty must be set aside, discussion of other outstanding problems would help promote a climate of greater trust, to our mutual benefit. So far Argentina has not been prepared to share this reasonable approach, but we shall persevere in our attempts and we must hope that Argentina will respond to the steps that we have proposed.
This strand of our policy is matched by the other strand — our commitment to the Falkland Islanders. We are giving them in the new constitution the means to exercise a measure of control over their own future. The new airport will enable us to make some reductions in the size of the garrison but to reinforce it swiftly should the need arise. It will play an increasingly important part in enhancing the economic and social development of the islands.
We want to improve relations with Argentina. We stand by our commitments to the Falkland Islands. There is nothing incompatible in those two aims. We are confident that this is the right approach, and that no sensible alernative to it exists. We shall, therefore, continue to implement it with determination and energy. I have no doubt that the House will endorse that approach.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

It being Ten o'clock MR. SPEAKER proceeded to put forthwith the deferred Question necessary to dispose of the proceedings on Supplementary Estimates 1984–85, Class IV, Vote 5.

Resolved,

That a supplementary sum not exceeding £20,000,000 be granted to Her Majesty out of the Consolidated fund to defray the charges which will come in the course of payment during the year ending on 31st March 1985 for expenditure by the Department of Energy in connection with the energy industries including related research and development, selective assistance to industry, energy conservation, oil storage, and certain other services including grants in aid and an international subscription.

ESTIMATES, 1985–86 (NAVY), VOTE A

Resolved,
That during the year ending on 31st March 1986 a number not exceeding 73,500 all ranks be maintained for Naval Service.

ESTIMATES, 1985–86 (ARMY), VOTE A

Resolved,
That during the year ending on 31st March 1986 a number not exceeding 190,300 all ranks be maintained for Army Service, a number not exceeding 5,000 for the Home Service Force, a number not exceeding 125,000 for the Individual Reserves, a number not exceeding 86,000 for the Territorial Army and a number not exceeding 12,600 for the Ulster Defence Regiment.

ESTIMATES 1985–86, (AIR), VOTE A

Resolved,
That during the year ending on 31st March 1986 a number not exceeding 96,600 all ranks to be maintained for Air Force Service, a number not exceeeding 4,850 for the Royal Air Force Reserve and a number not exceding 2,300 for the Royal Auxiliary Air Force.

SUPPLEMENTARY ESTIMATES 1984–85

Resolved,
That a further supplementary sum, not exceeding £1,214,334,000, be granted to Her Majesty out of the Consolidated Fund to defray charges for Defence and Civil Services which will come in the course of payment during the year ending on 31st March 1985, as set out in House of Commons Papers Nos. 182, 183 and 227.

ESTIMATES, EXCESSES, 1983–84

Resolved,
That a sum, not exceeding £4,260,259·70, be granted to Her Majesty out of the Consolidated Fund to make good excesses on certain grants for Defence and Civil Services for the year ended 31st March 1984, as set out in House of Commons Paper No. 184.
Bill ordered to be brought in upon the Resolutions this day relating to Supplementary Estimates and to Excesses, by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Peter Rees, Mr. John Moore, Mr. Barney Hayhoe and Mr. Ian Stewart.

CONSOLIDATED FUND (No. 3)

Mr. John Moore accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31 March 1984 and 1985: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 101.]

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Cinemas Bill [Lords] may be proceeded with, though opposed, until any hour. — [Mr. Garel-Jones.]

Orders of the Day — CINEMAS BILL [Lords]

Read a Second time.

Bill committed to a Committee of the whole House —[Mr. Garel-Jones.]

Bill immediately considered in Committee; reported, without amendment.

Bill read the Third time, and passed, without amendment.

Orders of the Day — Middle East (Peace Initiatives)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]

Mr. Dennis Walters: I consider that this is an opportune time to be debating a peace initiative in the middle east. It is also timely, because we have as an honoured guest in this country President Mubarak of Egypt, who, I believe, would agree with the proposition that a major effort to achieve a comprehensive settlement in the middle east should take place as soon as possible.
I have long advocated the convening of an international conference with the participation of the Soviet Union, but if that is not possible because of a point blank American refusal to consider it we should examine what other courses are open. A number of unusually favourable circumstances have combined to give a peace initiative launched now a slightly better chance of success than at any time since 1973 when the United States refused to seize the opportunity offered by the October war.
President Reagan has been returned for a second term, having won a massive electoral victory. During the campaign, he made fewer damaging promises to the Zionist lobby than is usual on such occasions—many fewer than his heavily defeated Democratic opponent whose electoral bribes to the Zionists were unedifying and apparently inexhaustible. The mid-term elections are some way off.
The Israeli economy is in an appalling mess which should make its Government more responsive than usual to American persuasion if firmly enough applied, and in Shimon Peres Israel has a Prime Minister who might even be inclined to respond positively. Also, withdrawal of the Israeli armed forces from Lebanon has acquired an aspect similar to a rout, although defeat has in no way blunted the brutality of the punitive attacks that they launch indiscriminately against both the Lebanese Shia fighters and the ordinary villagers of south Lebanon.
That the Security Council resolution should have been vetoed by the United States was not altogether surprising, but I find it surprising that Her Majesty's Government abstained. I shall be interested to hear the reason for that when my hon. Friend the Minister replies. It is ironic to recall, as the invading army pulls back towards the national frontier, that at no time were Israel's settlements in northern Galilee safer and more peaceable than during the 18 months truce with the Palestinians which preceded Israel's bloody and unprovoked invasion.
In any event, one way or another it is not unreasonable to assume that the Israeli armed forces will be out of Lebanon before long.
Lastly, the accord reached between Mr. Arafat and King Hussein marked a substantial step towards meeting American requirements. The agreement refers specifically to a joint Jordanian-Palestinian delegation, to the principle of land for peace and to the idea of a Jordan-Palestine confederation. Although the agreement has come under attack from certain elements in the PLO, and under sharp attack from Syria, Arafat has confirmed that, in principle, the agreement stands.
Statesmanship and expediency call for a major initiative. It would, therefore, be sad indeed if the reports


indicating a negative response, first to King Fahd and now to President Mubarak urging United States diplomatic intervention, were true.
Perhaps we all tend to go astray in believing that Washington can be influenced over its conduct in the Middle East by the means that friendly powers usually use when trying to change or modify one another's foreign policy. Persuasion and advice assume that the Government concerned have a foreign policy and are in effective control of it.
In regard to the Middle East, it is by no means certain that the United States Administration have a planned strategy of foreign policy. Perhaps we should start by recognising the possibility that they simply have a domestic policy of subservience to Israel, imposed by a powerful lobby, with an external policy in the Middle East which is basically no more than a reflection of that.
Should that be so, the only hope would lie in the gradual enlightenment of American opinion at the grass roots. But the dangers of delay are such that we cannot countenance such a possibility. We must continue to act on the presumption that Washington has a policy for the Middle East which is not entirely submissive to Israel, which is not blind to Western interests or to the pressures of international law and morality and is a policy which we can and should try to influence for the sake of peace and our mutual advantage.
The consequences of failing to act swiftly are alarming, and the fact that in the past warnings of impending danger have not materialised should not lull us into a foolish state of complacency. Iran looked fairly safe a year before the deluge, and Islamic fundamentalism feeds on the present unsatisfactory status quo. The Minister might care to refer to that and to the war with Iraq.
King Hussein has made his feelings well known, but there is still far too little awareness of the near despair felt by moderate Arab regimes at Western inertia and apparent unreasoning refusal to influence events while it is still possible to do so.
Since 1967, there have been a number of Middle East peace initiatives. Some appeared to have a greater chance of success than others, but all foundered in the face of Israeli intransigence. Each had its merits, although by adding one sentence on the right of Palestinian self-determination, it is difficult to improve on resolution 242, which calls for the withdrawal of Israel from territories occupied in the war of June 1967.
There has been much argument, most of it fatuous, about the significance of the omission of the word "the" before the words "territories occupied" in the English text of that resolution. The omission of "the" may mean something, and that something may be arguable, but it cannot have been intended to turn the entire resolution on its head and acknowledge any right for Israel to take permanent possession of the West Bank and Gaza or any large part of it. Most informed observers would agree that the American Secretary of State, William Rogers, got it about right in 1969, when he said:
We believe that while recognised boundaries must be established, and agreed upon by the parties, any changes in the pre-existing lines should not reflect the weight of conquest and should be confined to insubstantial alterations required for mutual security. We do not support expansionism. We believe troops must be withdrawn as the Resolution provides.
The question 18 years after 1967 is: where do we go from here? The Israelis will not budge unless the Americans compel them to do so, and the Americans are

reluctant to exercise serious pressure because of internal domestic considerations. Is there any way out of the impasse? I believe that Europe has a role to play. The Venice declaration amplified the terms of resolution 242 and set out the essential pre-conditions for a settlement: Israel's right to security, Palestinian right to self-determination, and the association of the PLO in the negotiations. This last point has been made much easier by the Hussein-Arafat accord. A restatement and updating of the Venice declaration might be an appropriate first step. Then it is worth considering a joint Euro-Arab approach to the United States. A top-level delegation consisting of the leading European and moderate Arab leaders could visit Washington together to urge on President Reagan the need to act now to bring peace to the middle east.
No doubt such a proposal sounds unrealistic and far fetched, but all imaginative initiatives appear unrealistic and even theatrical before they have taken place. A good example was President Sadat's visit to Jerusalem, which certainly broke the log jam. There is, of course, the problem of what they would say and recommend to President Reagan. It would be unrealistic to hope that they could agree on a joint Euro-Arab peace plan put to him. That would lead only to a futile argument about the merits of the different peace plans now on the table, including President Reagan's initiative at Camp David. It would be better to stick to broad issues such as the need for a new American initiative, the urgency of such action now, the need to revert to resolution 242 as the only solid and widely accepted basis on which to build a settlement. and the special obligation resting on the United States Administration to ensure that Israel complies with the resolution. Of course, there would have to be an agreed reference to Palestinian rights, which the Venice declaration already encompasses.
To remove the danger of war in the Middle East should be the top priority of Western foreign policy. Peace is in the interests of everyone—the West, the Arab countries, the Palestinians, who have suffered so much injustice, and not least of Israel. For there to be peace, Israel must concede that the Palestinians are entitled by historical, legal and moral rights to at least a measure of justice. At a minimum, that justice must be granted in the form of a homeland for the Palestinians on the West Bank and in Gaza. It should be noted that, under this formula and at the end of the negotiating process, the Palestinians would be recognising Israel at the price of the return to them of less than 30 per cent. of the land that was once theirs.
Israel would have to sacrifice some territory for peace, but in this day and age security cannot be achieved by a few more miles of territory. Surely Ben Gurion was right when, in old age, he said:
As for security, military defensible borders, while desirable, cannot by themselves guarantee our future. Real peace with our Arab neighbours—mutual trust and friendship — that is the only true security.
Real peace with our Arab neighbours"—
that is precisely what the Israelis are denying themselves by insisting on hanging on to land that does not belong to them—land inadmissibly acquired by war. Before it is too late, we must act to try to bring about the peace that has eluded us all for too long.

Mr. Robert Adley: In the few minutes that I have available, I begin by congratulating my hon.
Friend the Member for Westbury (Mr. Walters) on raising a matter that is of the utmost importance to all of us. This afternoon, my wife was talking to a friend about my intention to participate in this debate, and my wife's friend said, "In the Lebanon the Israelis are getting away with murder." That seems a good cue with which to start my remarks.
There are three countries in the world that are currently in contravention of United Nations resolutions for invading and occupying neighbouring nations' territories. There is the Soviet Union in Afghanistan; Vietnam in Kampuchea; and Israel in four countries—Jordan, Syria, the Lebanon and Egypt. Israel's idea of peace is to subjugate its neighbours, and destroy all trace of the Palestinian people.
The Arabs in the West Bank, Gaza, the Golan and the Lebanon are in the same position as the French resistance fighters were in world war two. They are fighting for the freedom of their own occupied territories, but the Israelis, through their propaganda machine, insist on calling all Palestinians terrorists. There will never be peace until this attitude changes.
My hon. Friend mentioned the position of the United States. I therefore ask my hon. Friend the Minister to consider two points that Her Majesty's Government, with our European partners, could countenance. At the moment, Israel enjoys access, on favourable terms, to EEC markets. All these concessions should be withdrawn until Israel withdraws from all the occupied territories in the middle east. Secondly, the British Government quite rightly discontinued the sale of arms to Israel while that country's troops were in the Lebanon. I understand that if Israel gets out of the Lebanon quickly Her Majesty's Government may reconsider and may start again the sale of arms to Israel, notwithstanding the fact that the Israeli Government will still be in possession of territories that do not belong to them internationally in the three other countries that I have already mentioned. Those two requests seem to be fairly modest.
The paranoia that the name Arafat brings into any conversation that one has with Israelis is, to those of us who know Mr. Arafat, incredible. At the moment, as my hon. Friend has said, there is the best chance of peace for years, but all that the Israelis are doing, by their paranoia, is throwing away the chance to give themselves the security that they need, which we understand that they need and to which they are entitled.
My hon. Friend mentioned the fuelling of the flames of Muslim fundamentalism. The repercussions of this go far beyond the middle east, and no one can possibly foresee where what is happening in southern Lebanon today may take us, through the activities of the Israeli forces as they carry out their policies in that sad and unfortunate country.
Of course Israel wants to live in peace behind secure borders. That is the policy of the British Government, which all hon. Members support. However, to try to obtain those objectives by the tactics of Sabra and Chatilla is never likely to win Israel friends, victory or any sort of peace and security.
The British Government must show the Israeli Government that their behaviour does not justify their inclusion among the nations whom we regard as being entitled to be treated as one of this country's favoured friends.

Mr. David Heathcoat-Amory: I am grateful to my hon. Friend the Member for Westbury (Mr. Walters) for permitting me to contribute to his debate.
There are no simple solutions to the middle east, but some actions make matters worse rather than better. I should like to mention the construction of Israeli settlements on the West Bank and the Gaza Strip. Israel does not have sovereignty over that territory, and does not claim it. They are occupied territories, and have been for more than 17 years. Every peace plan refers to the need at least to freeze the number of settlements in those areas. The Venice declaration, to which Britain is a party, declared those settlements illegal. The United Nations gas criticised them, and the Reagan plan of 1982 declared that they were not necessary for security and were an obstacle to peace.
What has happened? Since then, the number of Jewish settlers on the West Bank has more than doubled. As net immigration to Israel has now almost halted, the West Bank is being occupied not by an influx of immigrants but by a transfer of population from Israel. The present coalition Government in Israel has recently agreed to set up six more settlements by the autumn. That cannot bring peace any closer. It is grossly provocative to moderate Arab opinion and ensures that it is outbid by the men of violence.
Meanwhile, the House arrests and deportations go on. We have just learnt that Bir Zeit university at Ramallah has been closed by the Israeli authorities for two months. It is the eighth time that that has happened since 1979. Will my hon. Friend the Minister state clearly his views about the settlements on the West Bank and the Gaza Strip and may I, through you, Mr. Deputy Speaker, ask the Israeli Government not to compound the problem by continuing to defy their friends and enemies alike?

The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): I also congratulate my hon. Friend the Member for Westbury (Mr. Walters) on initiating this debate. He has had a great knowledge of and an interest in the middle east for a long time, and the House always listens to him carefully. I am also grateful to my hon. Friends the Members for Christchurch (Mr. Adley) and for Wells (Mr. Heathcoat-Amory) for their contributions to the debate. I assure them that I shall take what they have said carefully into account.
The Arab-Israeli dispute has lasted for almost 40 years. Like a cancer, it has eaten into the wellbeing of the inhabitants of the entire region, spilling over into countries initially quite detached from the dispute between Israel and the Arabs. It has had dramatic effects on regional stability and on the world's economy. As the problems have festered, extremism has grown on all sides and will continue to do so if there is not a firm and perceptible move towards a settlement.
Britain's interest is in seeing this conflict brought to an end as soon as possible. Two principles underpin our approach. First, we believe that Israel has a right to exist within secure and internationally recognised borders. In return, the Palestinians' right to self-determination must be respected.
As my hon. Friend the Member for Westbury said, there have recently been several encouraging developments in the search for peace. Indeed, this afternoon I attended most useful talks between the Prime Minister and President Mubarak. The key element has been the agreement last month between King Hussein of Jordan and the Palestinian leader, Yasser Arafat, on a joint negotiating position. We welcomed that agreement as a first step towards a settlement based on the exchange of peace for territory between Palestinians and Israel. Here is a basis on which further progress can be built.
Twice in recent months my right hon. Friend the Prime Minister has discussed the prospects for a settlement in the middle east with the President of the United States. President Reagan made it clear to her that he accepted the need for renewed efforts to take forward the process begun by King Hussein and that the United States has a special responsibility in the region. The President has also made this view plain on the occasion of two other important recent visits to Washington, that of King Fahd of Saudi Arabia in February and that of President Mubarak of Egypt, which ended yesterday. I saw King Fahd and the Saudi Foreign Minister in Saudi Arabia last week and heard at first hand that the Saudi Government are also determined that the present opportunity for progress should not be lost.
As my hon. Friend said, we are honoured to have President Mubarak in Britain today as our guest. It is plain that, in addition to supporting strongly the initiatives of King Hussein and Mr. Arafat, President Mubarak is also ready to play his part in bringing nearer the decisive stage of direct negotiation between Israel and the Arab side.
We have also noted with interest that these developments are being followed closely in Israel and that Prime Minister Peres has commented favourably on some aspects. We have a regular dialogue with the Israeli Government and look forward to the visit of Deputy Prime Minister Shamir before too long.
We are profoundly concerned by the conditions which prevail within the occupied territories, notably in the West Bank and the Gaza Strip, to which my hon. Friend the Member for Wells referred. My right hon. and learned Friend the Foreign Secretary drew our concern to the attention of the Government of Israel when he visited that country last October. We are in regular contact with representatives of the Palestinian people in those territories. We continue to deplore the strengthening of illegal Israeli settlements in their lands. We deeply regret the closure for two months of Bir Zeit university on the West Bank. We are also concerned about the economic conditions of the Palestinians in the occupied territories, and have recently increased the level of our aid.
My hon. Friends referred to the Lebanon. Recent developments there are a further indication of the destructive effect of the Arab-Israel conflict on the countries of that region. The horrifying events of the weekend in Beirut and in the south, in which further Lebanese and Israeli lives were lost, underline the urgent

need to break the cycle of violence. The Government's views are clear. We condemned the Israeli invasion of 1982. We have consistently called for the withdrawal of all foreign forces the presence of which is not authorised by the Lebanese Government. We therefore welcomed Israel's decision in January to make a full withdrawal and look for early and orderly completion of that pullback to the south of the international border. Israel must meanwhile respect international humanitarian law.
My hon. Friend the Member for Westbury referred to the British vote on the Lebanese draft resolution in the United Nations Security Council on 12 March. It was entirely right that the Security Council should discuss the situation in Lebanon. There were several elements of the draft which we could support, but, as a whole, it was unhelpful. It contained no reference to the role of UNIFIL, nor to the need to assist with the Secretary-General's efforts to promote a diplomatic solution. in our view, it would do nothing to arrest the cycle of violence or to accelerate Israel's withdrawal.
We remain deeply concerned about the situation in south Lebanon. We believe that Israel's iron fist policy will further fan the flames and damage her own security interests on her border with Lebanon. Violence of any sort, retaliation and counter-retaliation, will solve nothing. The need now is for a resumption of the Israel-Lebanon talks to make arrangements for an orderly withdrawal by the Israeli armed forces and for close co-operation with UNIFIL to protect Lebanese civilians.
My hon. Friend the Member for Westbury asked about the Iran-Iraq war. I should not end without saying something about the deterioration which the last few days have seen in that other appalling middle eastern conflict, the war between Iran and Iraq. We wish to see the earliest possible end to this tragic and wasteful episode. We have today been in touch with the United Nations Secretariat with the aim of a call being issued for a ceasefire on both sides. In the meantime, we are keeping a close watch on the situation of the British communities in Iran and Iraq. I am glad to say that we have had no reports of any British casualties, but we shall of course maintain maximum vigilance.
The middle east is an area of vital importance to Europe and to Western interests generally. The Government share the view expressed this evening that there is now a chance of progress in the search for a settlement of the Arab-Israel conflict. We look to the renewed efforts of the United States to take forward that process. We shall also continue to look for ways in which the European Community can play a helpful role and shall continue to use our influence to encourage the parties concerned to seek a peaceful resolution of their differences, so that the people of the middle east can at last enjoy a secure and dignified future, safe from the threat of violence and of war.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Eleven o' clock.